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PREMISES  OF  FREE  TRADE  EXAMINED; 
ALSO  REVIEWS 

OF 

BASTIArS  ''SOPHISMS  OF  PE0TECTI02^," 

OF 

PEOFESSOR    SUMNER'S    ARGUMENT   AGAINST       ^ 
"PROTECTIVE    TAXES," 

OF 

PROFESSOR    PERRY'S   "FARMERS   AND    THE    TARIFF," 

OF 

PROFESSOR   SUMNER'S   SPEECH   BEFORE   THE 
TARIFF   COMMISSION, 

AND   OF 

"PROGRESS    AND    POVERTY." 

BY 

GEORGE    BASIL    DIXWELL! 


CAMBRIDGE : 
JOHN    WILSON    AND    SON. 

ilUmbcrsitg  ^rcss. 

1883. 


'^K 


Copyright,  1883, 
By   Geoege  Basil  Dixwell. 


<^>, 


THE  PREMISES  OF  FREE  TRADE  EXAMINED. 


As  the  text-books  from  which  political  economy  is  taught  in 
most  of  our  colleges  are  generally  by  English  authors,  or  by 
Americans  who  have  adopted  the  English  views,  it  is  not 
surprising  that  we  should  meet  with  a  great  many  highly 
educated  men  who  believe  the  trans- Atlantic  ideas  to  be 
invulnerable.  They  have  been  taught  that  economical  phe- 
nomena are  too  complex  to  be  investigated  by  the  a  posteriori 
method,  and  that  nothing  can  be  relied  on  but  reasoning  from 
assumptions ;  and  they  have  accepted  with  delight  certain 
most  attractive  argumentations,  in  which  the  wasteful  futility 
of  protection  appears  to  be  demonstrated,  just  as  the  mathe- 
matician demonstrates  that  the  three  angles  of  a  triangle  are 
in  all  cases  equal  to  two  right  angles.  But  deductive  rea- 
soning has  its  own  liability  to  error.  Very  eminent  authors 
may  change  the  subject  or  change  the  premises  or  reason  from 
an  apparent  axiom,  which  upon  careful  examination  is  found 
little  better  than  a  blunder,  or  an  identical  proposition.  The 
writer  believes  that  all  these  logical  faults  are  to  be  found  in 
the  supposed  demonstrations  above  alluded  to  ;  and  he  pro- 
poses in  this  paper  to  point  out  a  few  of  them,  in  the  hope 
that  some  able  minds  may  be  led  to  review  their  conclusions, 
and  to  read  or  read  again,  with  a  candid  spirit,  what  lias  been 
urged  by  Rae,  Phillips,  Carey,  List,  Bowen,  Seaman,  Thomp- 
son, Greeley,  E.  P.  Smith,  Kelly,  Elder,  and  many  others 
who  have  written  in  favor  of  protection. 

Let  us  first  examine  Mr.  J.  R.  McCulloch's  apparent  dem- 
onstration that  absenteeism  is  not  financially  injurious  to  a 
country.     He  argued  in  this  way :  — 


1st.  "We  get  nothing  from  abroad  except  as  an  equivalent  for 
something  else  ;  and  the  individual  who  uses  only  Polish  wheat,  Sjtxon 
cloth,  and  French  silks  and  wine,  gives,  by  occasioning  the  exportation 
of  an  equal  amount  of  British  produce,  precisely  the  same  encourage- 
ment to  industry  here  as  he  would  give  were  he  to  consume  nothing 
not  directly  produced  among  us.  The  Portuguese  do  not  send  us  a 
single  bottle  of  port,  without  our  sending  to  them,  or  to  those  to  whom 
they  are  indebted,  its  worth  in  cottons,  hardware,  or  some  sort  of 
proiluce ;  so  that  whether  we  use  the  wine  or  its  equivalent  is,  except 
as  a  matter  of  taste,  of  no  importance  whatever." 

But  if  it  be  indifferent  whether  an  Irish  landlord  resid- 
ing in  Dublin  consumes  an  Irish  or  a  foreign  product,  it  is 
evidently  indifferent  whether  he  consumes  the  one  or  the  other 
in  Dublin  or  in  Paris.  Therefore,  absenteeism,  as  far  as  its 
financial  effects  are  considered,  is  a  matter  of  entire  indiffer- 
ence to  the  Irish  people. 

If  the  premises  be  correct,  the  conclusion  appears  to  be  in- 
evitable ;  but  in  this,  as  in  other  cases,  where  the  result  of 
reasoning  contradicts  the  almost  universal  opinion  of  man- 
kind, it  is  well  to  look  again  very  closely  at  the  premises. 
Let  us  do  this,  and,  in  order  not  to  perplex  ourselves  by  in- 
terposing money,  let  us  suppose  that  the  annual  produce  of 
the  land  of  Ireland  is  equivalent  to  30,000,000  bushels  of 
wheat,  and  that  the  landlord's  portion  for  rent  is  ten  per  cent, 
or  3,000,000  bushels  of  wheat.  If  this  ten  per  cent  of  the 
rude  product  of  the  land  be  sent  off  in  the  form  in  which  it  is 
raised,  it  is  evident  that  it  might  as  well  be  burned,  as  far  as 
the  people  of  Ireland  are  concerned.  The  people  will  have 
raw  products  to  consume  equivalent  to  27,000,000  bushels  of 
wheat.     This  we  will  call  case  first. 

Now,  alter  the  supposition,  and  let  the  3,000,000  bushels  of 
wheat  be  exchanged  for  Irish  manufactured  products,  and 
these  last  be  exported.  Then,  clearly,  the  people  of  Ireland 
will  have  available  for  consumption  one-ninth  part  more  of 
the  products  of  the  land  than  they  had  under  the  first  suppo- 
sition.    This  is  case  second. 

Now,  vary  the  supposition  yet  again.  Bring  home  the 
landlords,  and  confine  them  and  their  dependents  to  the  use 


of  Irish  manufactures.  The  people  of  Ireland  will  then  have 
for  consumption  the  same  quantity  of  wheat  as  in  the  last 
case,  and  also  the  manufactured  products  which  are  exported 
under  case  second.     This  we  will  call  case  third. 

In  the  first  case,  the  raw  produce  constituting  rent  is  sent 
abroad.  It  might  as  well  have  been  burned.  In  the  second 
case,  it  is  given  to  productive  laborers,  who  give  in  exchange 
manufactured  products,  which  are  exported.  Here  the  Irish 
people  get  3,000,000  bushels  of  wheat  to  consume  in  addition 
to  what  they  had  under  case  first.  In  the  third  case,  the 
Irish  people,  altogether,  have  for  consumj^tion  the  additional 
3,000,000  bushels  of  wheat  (the  same  as  in  case  second), 
and  also  an  equal  value  of  other  products,  subject  only  to  a 
deduction  of  what  the  landlords  and  their  Vives  and  children 
actually  use  themselves ;  and,  if  we  go  through  the  expendi- 
tures of  a  wealthy  family,  we  shall  find  this  deduction  to  be 
very  trivial.  A  very  large  part  of  their  incomes  are  ex- 
changed for  professional  and  personal  and  commercial  ser- 
vices. Those  who  render  such  services  constitute,  according 
to  the  census  of  the  United  States,  more  than  one  hundred 
and  thirty  distinct  classes,  and  are  over  one-fourth  part  of 
the  whole  working  population. 

Mr.  McCuUoch  saw  very  clearly  that  the  landlords  living 
in  Paris  would  only  obtain  services  and  commodities  by  ex- 
changing for  tliera  their  rents  or  other  Irish  products  into 
which  their  rents  were^  converted:  what  he  appears  to  have 
overlooked  is  that  the  landlords,  when  living  in  Dublin,  would 
obtain  Irish  commodities  and  services  only  in  exchange  for 
their  rents  or  other  Irish  products  into  which  those  rents  were  . 
converted.  The  producer  of  Dublin  stout  will  not  give  a 
single  bottle  of  it,  except  in  exchange  for  other  commodities, 
any  more  than  will  the  Portuguese  producer  of  port.  It 
would  appear,  then,  that  the  premises  of  Mr.  McCulloch  were 
quite  inaccurate,  and  that  the  conclusion  drawn  from  them 
must  be  abandoned.  Mr.  J.  S.  Mill,  in  his  "  Logic,"  in  book  v. 
chapter  iv.,  end  of  paragraph  4,  has  a  similar  error.  He  says 
it  is  indifferent  whether  an  Englishman  buys  British  or  French 
silks,  because  British  commodities  must  be  produced  and  ex- 


•ported  to  pay  for  the  French  silks.  He  forgets  that  the 
necessaries,  conveniences,  &c.,  of  the  British  weavers  are  as 
much  British  commodities  and  employ  as  much  industry  to 
produce  them  as  do  the  commodities  which  pay  for  the 
French  silks  in  the  other  case.  The  only  difference  is,  that 
in  one  case  the  British  weavers  are  deprived  of  their  support, 
and  in  the  other  case  they  are  not.  Everything  else  remains 
the  same,  except  that  the  consumer  may  get  the  French  silks 
a  trifle  cheaper,  —  a  matter  altogether  too  trivial  to  be  com- 
pared with  the  national  loss. 

Professor  Cairnes,  in  his  book  entitled  "Some  Leading 
Principles  of  Political  Economy,"  repeats  this  mistake,  and 
props  it  up  with  the  remark  that  if  it  be  an  error,  "  we  seem 
to  have  made  a  mistake  in  repealing  our  protective  laws  ;  nor 
were  protectionists,  after  all,  so  very  wrong  in  seeking  to  en- 
courage native  industry  by  compelling  expenditure  towards 
domestic  productions  ! "    See  part  ii.  chap,  i.,  note  at  the  end. 

Mr.  Mill  makes  use  of  the  error  to  prop  up  the  free-trade 
doctrine,  and  Professor  Cairnes  makes  use  of  the  free-trade 
doctrine  to  prop  up  the  error. 

Let  us  now  examine  another  specimen  of  reasoning :  the 
doctrine  that  a  universal  glut  of  all  commodities  is  impos- 
sible,—  not  a  permanent  glut,  but  aw?/ glut.  This  doctrine 
makes  a  business  man  open  his  eyes  wide  with  astonishment. 
They  get  at  it  in  this  way :  — 

1st.   "  Human  desires  are  unlimited. 

2d.   "  Commodities  are  paid  for  by  commodities. 

3d.  "  He  who  has  produced  a  commodity  has  therefore  the  means 
of  purchasing  the  other  commodity  he  desires.  Double  the  number  of 
products,  and  everybody  would  bring  a  double  demand  as  well  as  sup- 
ply. It  is  a  sheer  absurdity  that  all  things  should  fall  in  value,  and 
that  all  producers  should,  in  consequence,  be  insuificiently  remun- 
erated." 

Thus  says  Mr.  John  Stuart  Mill ;  and  Professor  J.  E. 
Cairnes,  in  his  work  entitled  "  Some  Leading  Principles  of 
Political  Economy,"  before  alluded  to,  maintains  that  with 
regard  to  commodities,  demand  and  supply,  as  general  phe- 
nomena, as  aggregates,  cannot  be  discriminated.     He  says : 


"  An  article  is  produced  and  is  offered  in  the  market :  it  is  now  sup- 
ply ;  but  the  possession  of  the  article  confers  upon  the  owner  a  pur- 
chasing power,  and  this  power  being  exercised,  the  article  becomes  a 
source  of  demand  ;  nor  is  there  any  other  source  from  which  demand  can 
spring.  Demand  as  an  aggregate  cannot  increase  without  supply,  nor 
supply  without  demand.  This,"  he  says,  "  is  fundamental  in  the 
theory  of  exchange  ;  and  all  assumptions  to  the  contrary  must  be 
regarded  as  baseless  and  absurd." 

Now,  every  business  man  knows  that  the  aggregate  demand 
for  commodities  is  sometimes  greater  and  sometimes  less ;  so 
much  so,  that  the  quantities  in  stock  are  sometimes  greatly 
reduced  and  sometimes  greatly  increased, —  even  to  the  ex- 
tent that  is  called  a  glut.  What,  then,  has  perplexed  the 
abstract  reasoners  ?  The  doctrine  of  value  appears  to  be  the 
culprit.  The  value  of  anything,  they  say,  is  what  it  "will 
exchange  for  in  other  things  ;  it  is  a  ratio ;  and  so,  of  course, 
it  is  absurd  to  say  that  all  values  can  rise  or  all  fall  together. 
Hence  Mr,  Mill  and  Professor  Cairnes  maintain  that  the 
supply  of  commodities  cannot  outrun  the  demand.  But  it  is 
just  here,  in  applying  to  commodities  the  arguments  appli- 
cable to  values,  that  the  reasoning  breaks  down,  and  is  found 
to  consist  in  changing  the  subject.  That  all  values  cannot 
rise  or  fall  together  may  be  perfectly  true ;  but  it  does  not 
follow  that  all  commodities  —  the  total  annual  product  — 
may  not  rise  or  fall  in  exchangeable  value ;  because  the  total- 
ity of  commodities  does  not  constitute  the  totality  of  values. 
Besides  commodities,  there  are  the  rights  to  incomes,  and  the 
totality  of  fixed  capital,  the  possession  of  which  gives  incomes. 
The  annual  product  in  the  United  States  being  taken  at 
6,000,000,000,  those  other  values  are  estimated  at  30,000,- 
000,000  ;  and,  in  fixing  their  minds  upon  commodities  alone, 
the  eminent  authors  in  question  overlooked  five-sixths  of  the 
values  which  the  money  power  has  constantly  to  measure. 
Let  no  one  suppose  that  Messrs.  Mill  and  Cairnes  intended  to 
include  all  these  under  the  term  "  commodities."  They  meant 
to  include  nothing  beyond  the  annual  product,  as  would  be 
abundantly  evident  if  there  were  space  to  copy  their  argu- 
ments in  extenso.     They  argued  the  case  as  if  there  existed 


8 

nothing  besides  commodities,  and  as  if  men  had  no  desires  for 
anything  else,  —  overlooking  that  most  pervasive  and  per- 
sistent instinct  of  man  to  increase  his  income  or  better  his 
condition,  of  which  Adam  Smith  remarks,  "  that  it  comes 
with  man  when  he  issues  from  the  womb,  and  continues  with 
him  until  he  enters  the  grave." 

Now,  the  action  of  this  instinct  sometimes  causes "  an  in- 
creased demand  for  commodities,  and  sometimes  a  great 
diminution  and  a  glut.  When  many  possessors  of  property 
yielding  an  income  arrive  at  the  conclusion  that  the  coun- 
try has  outgrown  its  fixed  capital,  —  that  it  needs  more 
houses,  farms,  mills,  forges,  &c.,  —  they  can  descend  into  the 
market,  sell  or  pledge  a  portion  of  their  bonds,  shares,  or 
other  property,  and  proceed  to  the  construction  of  new  rail- 
roads, houses,  cities,  mills,  forges,  &c. ;  and  this  movement 
will  involve  the  fuller  employment  of  the  community,  a  con- 
sequeht  diminution  in  the  stocks  of  commodities,  and  an  ad- 
vance in  their  exchangeable  value.  It  seems  to  be  of  the 
nature  of  such  movements  to  run  to  excess,  as  each  onward 
step  causes  a  larger  and  larger  demand  and  stimulates  more 
and  more  to  an  increased  production  by  making  the  earlier 
enterprises  profitable  ;  but,  finally,  just  as  the  most  prudent 
give  up  looking  for  a  crash,  it  comes.  It  suddenly  reveals 
itself  to  the  community  that  more  fixed  capital  has  been 
formed  than  can  for  the  time  being  be  profitably  used.  Then 
comes  a  violent  reflux  of  opinion.  Men  rush  into  the  belief 
that  more  has  been  done  in  that  direction  than  tho  country 
will  require  for  twenty  years.  Every  new  enterprise  falls  into 
discredit ;  the  population  which  was  engaged  in  converting 
floating  into  fixed  capital, —  that  is,  engaged  in  converting  a 
portion  of  the  annual  product  into  instruments  designed  to 
increase  the  future  product,  —  this  portion  of  the  population 
is  dismissed  into  idleness,  and  is  thereby  forced  to  diminish 
enormously  its  demand  for  commodities  ;  and  here  we  find 
ourselves  face  to  face  with  a  glut.  The  productive  energies, 
which  had  adapted  themselves  to  meet  the  effective  demand 
of  a  fully  employed  community,  find  themselves  in  excess  in 
presence  of  the  diminished  demand  of  a  community  only  par- 


tiallj  employed.  There  is  over-production  or  under-consump- 
tiou  ;  and,  as  a  necessary  consequence,  the  exchangeable 
value  of  the  whole  annual  product  suffers  a  great  diminution. 
Those  who  had  been  producing  upon  borrowed  capital  find 
themselves  unable  to  meet  their  obligations ;  there  are  fail- 
ures, panic,  forced  liquidations.  The  possessors  of  fixed  capi- 
tal next  find  their  incomes  diminished.  They,  for  the  time 
being,  are  no  longer  able  to  save  ;  no  longer  able  even  to 
maintain  their  previous  scale  of  expenditures.  These  are 
next  diminished,  with  the  effect  of  throwing  more  people  out 
of  employment,  diminishing  still  farther  the  aggregate  de- 
mand for  commodities,  and  consequently  their  aggregate  ex- 
changeable value.  Next,  or  coincidently,  all  instruments  of 
production  decline  ;  the  productive  energies  adapt  themselves 
after  a  while  to  the  new  conditions  ;  a  new  scale  of  exchange- 
able values  is  evolved ;  a  smaller  gross  annual  product,  in- 
volving a  smaller  average  annual  net  individual  income, 
issues,  and  the  community  gradually  and  slowly  settles  itself 
upon  a  lower  level,  from  which  in  time  to  take  a  fresh  start. 
To  trace  the  steps  of  recovery,  and  see  how  a  progressive 
community,  after  a  number  of  years,  works  back  to  its  former 
level  and  beyond  it,  might  or  might  not  be  interesting,  but 
would  exceed  the  limits  and  go  beyond  the  object  of  this 
paper,  which  in  this  portion  is  simply  to  show,  not  that  gluts 
do  occur,  for  this  everybody  knows,  but  that  just  reasoning 
ought  to  have  anticipated  them,  —  ought  to  have  seen  that  in 
the  present  state  of  our  knowledge  they  are  inevitable  and 
likely  to  be  of  considerable  duration.  The  panic  of  1873 
was  not  entirely  over  before  1879. 

The  next  specimen  of  abstract  reasoning  is  the  free-trade 
argument  published  by  Adam  Smith  in  1775,  and  repeated  in 
a  somewhat  modified  form  by  Mr.  J.  S.  Mill  three  quarters  of 
a  century  later. 

It  will  shorten  the  examination  if  we  first  establish  one  or 
two  preliminary  points. 

Between  1860  and  1865  the  Northern  States  supplied  the 
government  with  commodities  or  money,  which,  directly  or 
indirectly,  was  converted  into  commodities  of  the  value  of 

a 


10 

about  84,000,000,000  in  currency,  or  say  13,000,000,000  gold 
value,  in  four  years.  The  inducement  was  government 
bonds  promising  a  continuous  income.  Suppose,  now,  that 
instead  of  government  bonds  issued  to  carry  on  a  war,  there 
had  been  offered  to  the  community  new  industries  promising 
to  yield  as  great  an  income.  It  is  evident  that  in  the  same 
time  $3,000,000,000  would  have  been  forthcoming  for  the  de- 
velopment of  those  industries,  —  a  sum  greater  than  the  whole 
fixed  and  floating  capital  employed  in  1860  in  the  manufac- 
turing and  mechanical  industries  of  the  United  States.  The 
country,  then,  could  have  doubled  those  industries  in  four 
years.  That  the  annual  product  of  commodities  does  not  in- 
crease with  this  rapidity  is  not,  then,  because  of  the  inability 
to  find  capital,  but  because  men  do  not  discover  mutual  wants 
so  rapidly.  Perhaps  more  than  one-third  of  the  annual  prod- 
uct falls  to  the  share  of  those  who  desire  to  save  rather  than 
increase  their  annual  consumption.  They  must  be  tempted 
to  spend  by  the  discovery  of  new  products  or  new  services,  or 
by  the  gradual  growth  of  a  more  liberal  scale  of  living. 
Failing  this,  a  portion  of  tlie  annual  product  remains  in  stock, 
diminishing  profits  and  holding  in  check  the  expansion  of  the 
known  industries.  This  it  is  which  limits  the  field  of  indus- 
try in  a  community  still  possessed  of  a  vast  amount  of  unde- 
veloped resources.  Industry,  then,  as  a  matter  of  fact,  is  not 
held  in  check  by  the  want  of  capital,  but  by  the  want  of  a 
sufficiently  profitable  field  of  employment,  and  by  the  accu- 
mulated stocks  of  finished  products  and  of  materials  awaiting 
conversion.  The  legitimate  loans  of  banks  of  issue  are  made 
chiefly  upon  these  ;  and  these  loans  in  the  United  States,  we 
all  know,  exceed  $1,000,000,000. 

Mr.  Mill  recognized  that  these  stocks  of  goods  were  unem- 
ployed capital ;  but,  in  spite  of  this,  he,  as  well  as  Adam 
Smith,  argues  the  free-trade  question  upon  the  assumption 
that,  in  a  normal  condition  of  things,  every  atom  of  the  actual 
and  potential  capital  of  a  country  is  and  must  be  fully  em- 
ployed upon  productive  industry,  so  that  anything  taken  for 
new  industries  must  be  taken  or  withheld  from  the  old. 

We  come  now  to  the  argument  of  Adam  Smith,  contained 


11 

in  the  second  chapter  of  the  fourth  book  of  his  "  Inquiry  into 
the  Nature  and  Causes  of  the  Wealth  of  Nations."  The 
limits  of  space  forbid  the  quotation  of  his  whole  chapter, 
which  contains  a  great  deal  of  rhetorical  repetition  ;  but 
nothing  shall  be  passed  over  which  demands  reply. 

In  his  first  paragraph  he  calls  protected  industries  monop- 
olies. This  they  may  have  been  in  his  time,  when  almost 
every  trade  and  manufacture  was  a  close  guild  ;  but  this  they 
are  not  in  our  time  and  country,  with  50,000,000  of  people 
free  to  exercise  them.  To  use  the  word  now  is  anything  but 
complimentary  to  the  intellect  of  the  listener  or  reader. 

His  third  paragraph  maintains  that 

*'  The  general  industry  of  the  society  never  can  exceed  what  the 
capital  of  the  society  can  employ.  As  the  number  of  workmen  that 
can  be  kept  in  employment  by  any  particular  person  must  bear  a  cer- 
tain proportion  to  his  capital,  so  the  number  of  those  that  can  be  con- 
tinually employed  by  all' the  members  of  a  great  society  must  bear  a 
certain  proportion  to  the  whole  capital  of  that  society,  and  never  can 
exceed  that  proportion.  No  regulation  of  commerce  can  increase  the 
quantity  of  industry  in  any  society  beyond  what  its  capital  can  main- 
tain. It  can  only  divert  a  part  of  it  into  a  direction  into  which  it 
might  not  otherwise  have  gone ;  and  it  is  by  no  means  certain  that 
this  artificial  direction  is  likely  to  be  more  advantageous  to  the  society 
than  that  into  which  it  would  have  gone  of  its  own  accord." 

But  the  number  of  workmen  that  can  be  kept  in  employ- 
ment by  any  particular  person  does  not  bear  a  certain  propor- 
tion to  his  capital.  When  the  market  for  his  products  is 
dull,  a  large  part  of  his  capital  is  locked  up  in  unsold  goods; 
he  must  then  lessen  his  production  and  dismiss  some  of  his 
workmen.  Quicken  the  demand  for  goods,  and  his  ability  to 
employ  workmen  increases ;  and  the  same  is  true  of  society 
taken  together.  In  a  normal  condition  of  things  there  may 
be,  for  instance,  a  stock  of  goods  equal  to  two  months'  con- 
sumption of  the  whole  community,  —  a  value  in  the  United 
States  at  the  present  time  (1881)  considerably  exceeding  a 
thousand  millions  of  dollars.  And  observe  that  these  stocks 
of  commodities  are  the  very  things  —  the  food,  the  raiment, 
'the  tools,   &c. —  which  are   requisite,  and  in  fact  used,  in 


12 

carrying  out  any  new  undertakings.  The  proposition,  then, 
that  "  industry  never  can  exceed  what  the  capital  of  the  soci- 
ety can  support  "  is  totally  irrelevant*  One-half  of  the  capi- 
tal normally  unemployed  is  ample  for  the  inauguration  of 
gigantic  enterprises,  and  these,  if  within  the  strength  of  the 
community,  will  not  prevent  anything  being  done  which 
would  otherwise  have  been  done.  On  the  contrary,  the  pre- 
viously existing  industries  will  be  stimulated  to  larger  pro- 
duction. 

Let  us  suppose  that  the  United  States  at  the  end  of  1879 
were  producing  and  consuming  commodities  equal  to  a  value 
of  $6,000,000,000  for  the  year,  and  with  a  surplus  stock  equal 
to  a  value  of  $1,000,000,000.  If  at  that  time  they  commenced 
forming  new  instruments  (mills,  forges,  farms,  houses,  and 
railroads)  to  an  annual  value  of  $300,000*000  over  and  be- 
yond the  regular  and  normal  movement,  there  would  be,  as  we 
see,  $1,000,000,000  of  unemployed  floating  capital  out  of  which 
to  take  the  funds  ;  but  these  funds  would  go  to  recompense  the 
producers  of  the  new  instruments,  and  would  be  by  them  ex- 
pended for  the  most  part  for  commodities,  thus  relieving  the 
capitalists  of  a  portion  of  their  stocks  and  placing  them  in  a 
position  to  employ  more  labor  for  the  sake  of  enlarging  their 
production  of  commodities.  But  whatever  they  thus  expend- 
ed for  labor  would  lead  to  the  production  of  more  than  twice 
the  value  expended  in  labor,!  and  it  might  well  have  happened 
that  at  the  end  of  1880  the  gap  made  in  the  stock  of  unem- 
ployed floating  capital  was  quite  repaired,  and  the  country  as 
ready  to  continue  a  similar  movement  in  1881  as  it  was  to 
commence  it  a  year  before.  Meanwhile,  the  extra  recom- 
pense to  labor  during  the  year  would  have  been  not  less  than 
$600,000,000. 

Vary  the  amounts  if  you  please,  but  you  will  find  that  any 

*  It  never  can,  for  any  considerable  time,  be  nearly  as  great  as  the  capital 
can  support ;  for,  if  it  were,  there  would  be  no  stock  of  commodities,  which 
would  cause  such  high  prices  and  such  high  rates  of  interest  as  must  inevitably 
moderate  the  industrial  movement. 

t  The  census  of  1870  gave,  as  the  total  value  added  to  materials  by  the  me- 
chanical and  manufacturing  industries,  $1,744,000,000,  of  which  $776,000,000 
went  to  labor. 


13 

new  enterprise  not  out  of  proportion  to  the  existing  surplus 
stock  of  commodities  will  result,  1st,  in  an  enlarged  em- 
ploj^ment  of  laborers  ;  and,  2d,  in  the  creation  of  new  subsidi- 
ary capital,  or  say  rather  of  new  instruments  of  production, 
which  would  not  otherwise  have  come  into  existence.  But  a 
free-trader  may  say,  How  do  you  know  that  there  is  any 
surplus  stock  of  commodities?  and  we  should  reply  that,  in 
the  first  place,  we  know  it  as  a  matter  of  fact,  which  can  be 
verified,  any  day  you  please  to  take  evidence,  in  State  Street 
or  Wall  Street  or  anywhere  else.  But  as  our  free-trade 
brethren  do  not  like  facts,  nor  believe  in  them  unless  they 
agree  with  conclusions  deduced  from  postulates  admitted  by 
their  own  authors,  we  will  try  to  show  that  in  an  industrial 
community  there  must  be  normally  a  stock  of  commodities  or 
of  unemployed  capital. 

First,  then,  take  industry  A.  Those  who  commenced  it 
did  so  for  the  sake  of  profit.  But,  so  long  as  they  obtained  a 
satisfactory  profit,  the  same  motive  would  lead  them  to  en- 
large their  production.  If  one  man  did  not,  another  would  ; 
and  so  the  increase  of  the  industry  would  go  on  until  it  over- 
ran the  demand.  A  stock  would  then  accumulate,  bringing 
down  profits  and  locking  up  a  portion  of  the  producer's  capi- 
tal at  the  same  moment.  But  what  is  true  of  industry  A  is 
true  of  B,  C,  D,  &c. ;  and  we  thus  arrive  at  the  conclusion 
that  each  carries  along  a  surplus  stock.  When  this  stock  is 
diminished  by  a  novel  or  increased  demand,  prices  rise,  and 
the  industry  is  stimulated  ;  when  the  stock  is  increased,  prices 
fall,  and  the  industry  is  checked. 

No  economist,  so  far  as  we  know,  has  noticed  the  vast  ag- 
gregate amount  of  these  stocks,  nor  the  mannep  in  which  they 
regulate  the  play  of  the  industrial  forces  ;  and  yet,  without 
knowing  about  them,  it  is  impossible  to  understand  what  hap- 
pens upon  the  commencement  of  a  great  war,  or  of  a  great 
industrial  movement.  When  we  have  ascertained  what  the 
ordinary  average  stock  is,  —  whether  equal  to  two  or  three 
or  more  months'  consumption,  —  it  will  become  possible  to 
form  a  rational  opinion  as  to  how  far  any  industrial  move- 
ment can  be  pushed  without  bringing  on  a  scarcity  of  floating 
capital  and  a  stringency  in  the  money  market. 


14 

But,  meanwhile,  it  is  something  to  have  satisfied  ourselves 
that  such  stocks  must  and  do  exist,  and  that  systems  framed 
in  ignorance  or  disregard  of  them  are  necessarily  erroneous. 
Such  a  system  is  that  of  Adam  Smith  in  his  third  paragraph 
above  quoted.  He  starts  with  a  self-evident  axiom  that 
"  the  general  industry  of  the  society  never  can  exceed  what 
the  capital  of  the  society  can  employ."  He  then  repeats  the 
idea  in  different  words  three  several  times ;  and  then,  mis- 
taking apparently  this  rhetorical  artifice  for  logic,  he  draws 
his  conclusion  that  "  a  regulation  of  commerce  can  only  di- 
vert a  portion  of  the  capital  of  the  society  into  directions  into 
which  it  might  not  otherwise  have  gone."  This  conclusion 
will  follow  from  his  axiom,  whenever  an  industrial  commu- 
nity shall  be  found  in  which  there  exists  no  unemployed  cap- 
ital, and  no  funds,  which,  though  originally  intended  for 
private  expenditure,  are  capable  of  being  diverted  to  the  sup- 
port of  productive  labor  the  moment  a  protective  law  affords 
a  sufficient  motive  for  doing  so.  Until  such  a  community  be 
found,  the  conclusion  does  not  follow  from  the  premises. 
His  argument,  if  it  can  by  any  stretch  of  courtesy  be  called 
an  argument,  does  not  cohere. 

In  the  next  four  paragraphs  he  argues  from  the  supposed 
interests  and  motives  of  men  that  they  would  in  certain  cases 
act  in  accordance  with  the  public  interest,  and  he  thence 
concludes  that  they  are  "led  by  an  invisible  hand  to  promote 
an  end  which  was  no  part  of  their  intention." 

This  is  a  stupendous  generalization  to  be  jumped  at  from  a 
few  \evj  uncertain  coincidences.  Had  he  inquired,  after  the 
inductive  method  laid  down  by  Bacon,  as  to  whether  the  sel- 
fish private  acts  of  men  coincided  generally  with  the  interests 
of  the  society,  he  would  have  found  that  innumerable  nega- 
tive instances  forbade  any  such  conclusion. 

His  next  paragraph  argues  that  men  can  judge  what  is  for 
their  own  interest  better  than  any  statesman  can.  This  does 
not  seem  to  be  very  evident,  in  light  of  the  fact  that  over 
ninety  per  cent  of  business  men  fail  ;  and,  if  it  were  evident, 
it  has  been  noted  already  that  there  is  no  scientific  basis  for 
the  assumption  that  individual   private   interests   generally 


15 

coincide  with  those  of  the  public.  All  that  is  evident  is,  that 
a  statesman  cannot  undertake  to  attend  to  the  private  affairs 
of  each  individual,  who,  therefore,  is  left  to  manage  for  him- 
self, under  the  restraint  of  general  laws.  These,  however, 
forbid  him  to  build  unsafe  ships  or  houses,  to  encroach  upon 
or  prevent  the  laying  out  of  a  public  way,  to  set  up  lotteries 
or  gambling-houses,  to  tie  up  property  indefinitely,  to  use 
other  than  certain  weights  and  measures,  &c.,  ad  infini- 
tum. Uninstructed  common  sense  recognizes  everywhere 
that  the  immediate  interest  of  the  individual  is,  in  an  im- 
mense number  of  instances,  quite  opposite  to  the  interest  of 
the  community  ;  and  one  of  the  instances  is,  when  the  indi- 
vidual buys  of  the  foreigner  at  the  smallest  difference  of 
price,  while  his  fellow-citizen,  who  could  make  the  article, 
sits  idle  or  becomes  a  charge  upon  the  society. 

In  the  next  two  paragraphs  Adam  Smith  argues  that 

"  It  is  the  maxim  of  every  prudent  master  of  a  family  never  to  at- 
tempt to  make  at  home  what  it  will  cost  him  more  to  make  than  to 
buy,"  and  that  "  What  is  prudence  in  the  conduct  of  every  private 
family  can  scarce  be  folly  in  that  of  a  great  kingdom.  If  a  foreign 
country  can  supply  us  with  an  article  cheaper  than  we  can  make  it 
ourselves,  better  buy  it  of  them  with  some  part  of  the  produce  of  our 
own  industry,  employed  in  a  way  in  which  we  have  some  advantage. 
The  general  industry  of  the  country,  being  always  in  proportion  to  the 
capital  which  employs  it,  will  not  thereby  be  diminished,  no  more 
than  that  of  the  above-mentioned  artificers,  but  only  left  to  find  out  the 
way  in  which  it  can  be  employed  to  the  greatest  advantage." 

Here  are  two  fallacies,  of  confusion.  The  first  is  in  com- 
paring a  nation  which,  by  his  own  supposition,  is  not  fully 
occupied,  with  an  individual  who,  by  his  own  supposition,  is 
fully  occupied.  Let  us  correct  this  by  supposing  the  individual 
to  have  employment  only  four  days  out  of  six.  He  will  then 
be  a  very  z'wprudent  and  thriftless  master  of  a  family  if  he  sits 
idle  two  days  in  the  week,  because  somebody  else  excels  him  in 
all  save  his  special  trade.  He  will  set  himself  about  some- 
thing, will  gradually  acquire  skill  and  become  more  indepen- 
dent ;  and  his  income  all  the  time  will  be  augmented.  The 
second  fallacy  is  introduced  by  the  use  of  the  word  cost.     We 


16 

immediately  figure  to  ourselves  what  the  article  would  cost, 
calculating  his  labor  at  what  he  earns  during  his  four  occu- 
pied days ;  but  what  he  makes  w^hile  he  would  otherwise  be 
idle  costs  him  nothing ;  and  what  a  nation  makes  with  labor 
otherwise  idle  and  with  capital  which  would  otherwise  be 
lying  unemployed,  or  which  perhaps  would  never  have 
come  into  existence,  costs  the  nation  nothing.  By  producing 
the  article  it  would  otherwise  import,  it  adds  to  the  national 
revenue  the  total  gross  value  of  the  article  produced,  or 
rather  the  total  value  of  what  would  have  otherwise  been 
exported.  The  argument  that  industry  will  not  be  dimin- 
ished because  it  is  always  in  proportion  to  capital,  would  be 
good  if  true,  but  is  good  for  nothing  after  we  have  found  out 
that  industry  is  held  in  check,  not  by  the  want  of  capital,  but 
by  the  want  of  a  field  of  employment  sufiQciently  profitable  to 
attract  capital. 

Adam  Smith  continues :  — 

"  Though  for  the  want  of  such  (protective)  regulations  the  society 
should  never  acquire  the  proposed  manufacture,  it  would  not,  on  that 
account,  necessarily  be  the  poorer  in  any  period  of  its  duration.  In 
every  period  of  its  duration  its  whole  capital  and  industry  might  still 
have  been  employed,  though  upon  different  objects,  in  the  manner  that 
was  most  advantageous  at  the  time.  In  every  period  its  revenue 
might  have  been  the  greatest  which  its  capital  could  afford,  and  both 
capital  and  revenue  have  been  augmented  with  the  greatest  possible 
rapidity." 

This  would  be  correct,  were  the  facts  as  to  capital  such  as 
he  imagined.  He  knew  nothing  of  the  normal  existence  of 
unemployed  capital ;  nothing  of  the  rapidity  with  which  new 
capital  can  be  taken  from  income  ;  nothing  of  the  impetuosity 
with  which  the  savers  rush  upon  and  occupy  every  field  of 
emplo3'ment  which  promises  a  profit. 

But  the  world  has  learned  something  in  a  hundred  years  ; 
and  in  the  light  of  the  newly  observed  facts,  we  know  that  in 
consequence  of  such  regulations  the  nation  will  in  every 
period  of  its  duration  enjoy  a  larger  revenue  and  acquire  a 
larger  capital. 


17 

We  come  now  to  the  an ti -protectionist  argument  of  Mr. 
John  Stuart  Mill.     He  says :  — 

"  There  can  be  no  more  iudustry  than  is  supplied  with  materials  to 
work  up  and  food  to  eat.  Self-evident  as  the  thing  is,  it  is  often  for- 
gotten that  the  people  of  a  country  are  maintained  and  have  their 
wants  supplied,  not  by  the  produce  of  present  labor,  but  of  past.  They 
consume  what  has  been  produced,  not  what  is  about  to  be  produced. 
Now,  of  what  has  been  produced,  a  part  only  is  allotted  to  the  support 
of  productive  labor ;  and  there  ^ill  not  and  cannot  be  more  of  that 
labor  than  the  portion  so  allotted  (which  is  the  capital  of  the  country) 
can  feed  and  provide  with  the  materials  of  production. 

"  Yet,  in  disregard  of  a  fact  so  evident,  it  long  continued  to  be  be- 
lieved that  laws  and  government,  without  creating  capital,  could  create 
industry." 

This  is  Adam  Smith's  argument  over  again,  and  is,  in 
brief :  — 

1st.    Industry  cannot  exceed  what  capital  can  maintain. 

2d.  Industry,  therefore,  cannot  increase  until  new  capital 
has  been  created. 

3d.   Laws  and  governments  cannot  create  capital. 

4th.  Therefore  laws  and  governments  have  no  power  to 
increase  industry. 

But  to  make  the  later  propositions  flow  from  the  first,  a 
vast  gap  has  to  be  filled  up :  it  requires  to  be  proved  that 
in  a  normal  condition  of  things  there  is  no  unemployed  capi- 
tal, and  no  funds,  which,  although  intended  for  unproductive 
consumption,  are  capable  of  being  instantly  turned  to  the 
support  of  production  the  moment  that  a  new  industry,  in- 
trenched by  a  protective  law,  presents  a  profitable  field  of 
employment. 

This  is  a  question  of  fact ;  and  the  moment  we  inquire  into 
the  facts,  we  find  that  the  unemployed  capital  in  the  United 
States  is  vast,  probably  much  exceeding  $1,000,000,000  ;  and 
that  the  ability  to  reinforce  this  out  of  the  funds  intended 
for  unproductive  consumption  within  the  year  is  also  vast, 
probably  a  good  deal  over  1700,000,000.  Before  these  facts 
the  whole  argument  falls  to  pieces. 

Mr.  Mill  continues  as  follows  :  — 

3 


18 

"  Not  by  making  the  people  more  laborious,  or  increasing  the  effi- 
ciency of  their  labor  :  these  are  objects  to  which  the  government  can 
in  some  degree  contribute.  But,  when  the  people  already  worked  as 
hard  and  as  skilfully  as  they  could  be  made  to  do,  it  was  still  thought 
that  the  government,  without  providing  additional  funds,  could  create 
additional  employment." 

These  are  wonderful  words,  as  showing  how  far  the  most 
conscientious  man  may  be  led  in  misrepresenting  his  oppon- 
ent's positions.  The  protectionist  does  not  maintain  that  the 
government  can  increase  the  industry  of  a  people  who  already 
work  as  hard  and  as  skilfully  as  they  can  be  made  to  ;  but 
that  of  a  people  who  do  not  already  work  as  hard  and  as  skil- 
fully as  they  can  be  made  to.  Indeed,  to  suppose  that  they 
who  already  did  all  they  could  might  still  be  made  to  do 
more  (whether  the  government  provided  additional  funds  or 
not),  seems  to  be  one  of  those  blunders  or  bulls  which  one 
would  hai'dly  expect  to  find  in  the  deliberate  composition  of 
one  who  has  written  so  admirably  upon  logic. 

Mr.  Mill  continues :  — 

"  A  government  would,  by  prohibitory  laws,  put  a  stop  to  the 
importation  of  some  commodity  ;  and  when  by  this  it  had  caused  the 
commodity  to  be  produced  at  home,  it  would  plume  itself  upon  having 
enriched  the  country  with  a  new  branch  of  industry,  would  parade  in 
statistical  tables  the  amount  of  produce  yielded  and  labor  employed  in 
the  production,  and  take  credit  for  the  whole  of  this,  as  a  gain  to  the 
country,  obtained  through  the  prohibitory  law.  Although  this  sort  of 
political  arithmetic  has  fallen  a  little  into  discredit  in  England,  it  flour- 
ishes still  in  the  nations  of  continental  Europe.  Had  legislators  been 
aware  that  industry  is  limited  by  capital,  they  would  have  seen  that,  the 
aggregate  capital  of  the  country  not  having  been  increased,  any  por- 
tion of  it  which  they  by  their  laws  had  caused  to  be  embarked  in  the 
newly  acquired  branch  of  industry  must  have  been  withdrawn  or  with- 
held from  some  other,  in  which  it  gave,  or  would  have  given,  employ- 
ment to  probably  about  the  same  quantity  of  labor  which  it  employs  in 
its  new  occupation." 

Here  the  cat  jumps  out  of  the  bag,  and  we  see  how  Mr.  Mill 
made  out  his  proposition,  which  he  called  invulnerable.  He 
translates  his  original  proposition  that  industry  cannot  exceed 


19 

what  capital  can  maintain,  into  the  words,  "  industry  is  lim- 
ited by  capital,"  which  are  ambiguous.  In  one  sense  they  are 
identical  with  his  original  and  fundamental  proposition  ;  but 
his  conclusions,  as  we  have  seen,  cannot  be  deduced  from  this. 
In  the  other  sense  they  mean  that,  in  point  of  fact,  industry 
does  not  increase  because  there  is  not  any  unemployed  capital 
nor  any  other  funds  wliich  can  be  at  once  turned  into  capital. 
His  conclusions  would  logically  follow  from  this  proposition  ; 
but  this  proposition,  as  we  have  seen,  is  not  true.  But,  by 
converting  his  first  and  fundamental  proposition  into  an  am- 
biguous form,  he  misled  himself  and  his  readers,  and  seemed 
to  prove  that,  when  millions  of  practical  men  believed  they 
had  been  enriched  by  a  protective  law,  they  were  only  as 
many  millions  of  idiots  for  thinking  so.  In  doiug  this,  he 
committed  precisely  the  error  which  he  denounced  in  his 
"  Logic,"  chap.  vi.  sec.  4,  where  he  says  :  — 

"  The  commonest  and  certainly  the  most  dangerous  fallacies  of  this 
class,  are  those  which  do  not  lie  in  a  single  syllogism,  hut  slip  in  be- 
tween one  syllogism  and  another  in  a  chain  of  argument,  and  are  com- 
mitted by  changing  the  premises.  A  proposition  is  proved,  or  an 
acknowledged  truth  laid  down,  in  the  first  j^art  of  an  argumentation  ; 
and  in  the  second  a  farther  argument  is  founded,  not  on  the  same 
proposition,  but  on  some  other  resembling  it  sufficiently  to  be  mis- 
taken for  it.  Instances  of  this  fallacy  will  be  found  in  almost  all  the 
argumentative  discourses  of  unprecise  thinkers,"  &c. 

But  here  an  instance  is  found  in  his  own  argument :  a  great 
logician,  when  closely  examined,  is  seen  committing  a  capital 
error  in  logic,  and  thereby  teaching  us  how  signally  unreliable 
is  the  purely  abstract  system  of  reasoning,  and  how  constantly 
it  requires  to  be  checked  and  verified  by  comparison  with 
facts. 

The  absurdities  into  which  abstract  reasoning  may  run  by 
overlooking"  important  economical  facts  is  curiously  shown  by 
another  doctrine,  enforced  at  great  length  by  Mr.  J.  S.  i\Iill. 
This  is  the  doctrine  that  a  demand  for  commodities  "  does  not 
and  cannot  create  any  em])loyment,  except  at  the  expense  of 
other  employment  which  existed  before."     This  flies  in  the 


20 

face  of  two  economical  facts.  First,  that  people  are  con- 
stantly striving  to  save ;  and,  second,  that  there  always,  in  a 
normal  condition  of  society,  exists  a  stock  of  unsold  goods  or 
of  materials  awaiting  transformation,  —  in  short,  a  vast  ag- 
gregate of  unemployed  capital.     He  argues  thus  :  — 

"  A  consumer  may  expend  his  income  either  in  buying  services  or 
commodities ;  he  may  employ  part  of  it  in  hiring  journeymen  brick- 
layers to  build  a  house,  or  excavators  to  dig  artificial  lakes,  or  laborers 
to  make  plantations  and  lay  out  pleasure-grounds  ;  or,  instead  of  this, 
he  may  expend  the  same  value  in  buying  velvet  and  lace." 

If  he  does  the  latter,  Mr.  Mill  concludes  that  the  additional 
quantity  of  velvet  which  his  demand  causes  to  be  produced 
could  not  be  produced  at  all  were  it  not  that  the  bricklayers, 
&c.,  being  now  without  work,  their  demand  for  necessaries, 
&c.,  ceases,  and  hence  the  production  of  those  necessaries,  &c., 
ceases ;  and  hence  the  precise  amount  of  capital  necessary  for 
a  larger  production  of  velvet  is  set  free.  "  There  was,"  he 
says,  "  capital  in  existence  to  do  one  of  two  things,  —  to 
make  the  velvet  or  produce  necessaries  for  the  bricklayers,  — 
but  not  to  do  both  !  " 

Imagine  the  case  of  a  young  man,  who,  being  imbued  with 
these  doctrines,  is  thrown  into  practical  life  in  the  United 
States,  and  obliged  to  consider  business  problems  into  which 
enters  as  a  factor  the  probable  amount  of  the  capital  unem- 
ployed at  the  moment,  he  being  utterly  ignorant  of  the  fact 
that  the  aggregate  is  generally  very  large  and  sometimes 
enormous.  What  grave  blunders  he  would  make,  and  at  how 
fearful  an  expense  would  he  unlearn  what  he  had  been  taught 
at  school  or  college !  If  we  take  Mr.  Mill's  consumer  as 
merely  the  embodiment  of  the  totality  of  consumers,  we  know 
that  in  one  phase  of  the  revolving  phenomena  of  society  he 
may  have  been  saving  until  the  general  glut  of  commodities 
has  reduced  all  profits  so  low  that  there  is  no  longer  a  suffi- 
cient inducement  to  save.  If,  then,  he  sets  his  bricklayers  at 
•work  and  buys  his  velvet,  his  purchases  will  relieve  the  velvet 
maker  of  a  portion  of  the  stock  of  goods  which  held  his  in- 
dustry in  check,  and  will  enable  him  to  make  more  velvet ; 


21 

and  the  bricklayers,  now  employed,  will  purchase  a  portion  of 
the  overstock  of  necessaries,  and  enable  their  producers  to 
augment  their  production.  And  this  can  go  on  until  the  pro- 
duction of  commodities  has  become  so  profitable  that  it  may 
appear  desirable  to  increase  the  aggregate  of  productive  in- 
struments ;  and  the  employment  of  men  to  construct  these 
will  cause  a  further  demand  for  commodities,  a  further  dimin- 
ution of  the  unemployed  capital,  a  further  rise  in  profits,  con- 
current with  a  greatly  increased  demand  for  labor. 

Bat  our  young  man  has  been  taught  that  an  increased 
supply  of  commodities  is  impossible,  unless  at  the  same  time 
there  is  an  equal  diminution  in  the  demand  for  services,  or 
for  other  commodities  ;  that  a  glut  is  impossible  ;  that  demand 
cannot  in  the  aggregate  increase  beyond  supply,  nor  supply 
beyond  demand  ;  that  no  new  industry  can  be  introduced 
except  by  diminishing  or  preventing  some  other  industry  ; 
that  the  demand  for  labor  cannot  increase  suddenly,  but  only 
gradually  and  slowly,  as  capital  is,  little  by  little,  saved  out 
of  income.  Pie  has  been  taught  these  and  other  errors,  which 
tend  to  seriously  mislead  him  in  practical  life,  and  may  ruin 
him,  if  he  wants  that  quick  perception  and  almost  intuitive 
interpretation  of  facts  which  are  needed  to  place  him  where 
he  would  have  been  had  he  never  studied  these  subjects 
abstractly. 

In  Professor  Cairnes's  book,  entitled  "  Some  Leading  Prin- 
ciples of  Political  Economy,"  already  alluded  to,  we  have  an 
elaborate  work,  designed  evidently  to  affect  public  opinion 
in  the  United  States  and  on  the  continent  of  Europe  in  favor 
of  free  trade.  Let  us  examine  its  logic.  lie  says,  part  iii., 
chapter  i.,  paragraph  iii. :  — 

"  Secondly,  when  it  is  said  that  international  trade  depends  on  the 
difference  in  the  comparative,  not  in  tlie  absolute,  cost  of  producing 
commodities,  the  costs  compared,  it  must  be  carefully  noted,  are  the 
costs  in  each  country  of  the  commodities  which  are  the  subjects  of  ex- 
change, not  the  different  costs  of  the  same  commodity  in  the  exchang- 
ing countries.  Thus,  if  coal  and  wine  be  the  sul)jects  of  a  trade  between 
England  and  France,  the  comparative  costs  on  which  the  trade  de- 
pends are  the  comjmrative  costs  of  coal  and  wine  in   Friuicc  as  com- 


22 

pared  with  the  comparative  costs  of  the  same  articles  in  England. 
England  might  be  able  to  raise  coal  at  one-half  the  amount  of  labor 
and  abstinence  needeil  in  France ;  but  this  alone  would  not  render  it 
profitable  for  France  to  obtain  her  coal  from  England.  If  her  disad- 
vantage in  procuring  other  commodities  was  as  great  as  in  producing 
coal,  she  would  gain  nothing  by  an  exchange  of  products,  and  the  con- 
ditions of  a  trade  between  the  two  countries  would  not  exist.  But, 
supposing  she  was,  in  the  case  of  some  other  commodity,  under  a  less 
disadvantage  than  in  that  of  coal,  still  more,' if  she  had,  with  regard  to 
that  other,  —  as  in  wine,  —  a  positive  advantage,  it  would  at  once  be- 
come her  interest  to  employ  this  commodity  as  a  means  of  obtaining 
til  rough  trade  her  coal  from  England,  instead  of  producing  coal  di- 
rectly from  her  own  mines." 

All  that  this  proves  is,  that  in  some  cases  it  will  be  advan- 
tageous for  France  to  get  its  iron  from  England  in  exchange 
for  wine.  That  it  will  not  be  so  in  all  cases  is  easily  shown, 
as  follows :  Let  the  utmost  requirements  of  England  for  wines 
be  .£2,000,000  sterling;  let  the  requirements  of  France  for 
iron  be  £10,000,000  sterling.  She  (France)  can  in  this  case 
obtain  from  England  iron  somewhat  more  cheaply,  —  we  say 
someivhat,  because  the  advantages  would  be  divided  between 
the  two  countries,  —  but  she  would  have  to  go  without  four- 
fifths  of  the  iron  she  required.  Her  saving  of  labor  and  ab- 
stinence upon  the  iron  she  did  get  from  England  would  be  a 
considerable  percentage,  of  the  value  of,  let  us  say,  100,000 
tons  of  iron  ;  her  loss  would  be  the  enormously  greater  value 
of  400,000  tons  of  iron. 

Professor  Cairnes's  reasoning,  then,  leads  only  to  a  jjarticu- 
lar  conclusion^  and  can  be  used,  only  as  a  particular,  not  as  a 
universal,  premise. 

Further  on  in  the  same  paragraph  Professor  Cairnes  quotes 
the  instance  of  Barbadoes  buying  to  advantage  its  food  in 
New  York,  and  paying  in  tropical  products,  notwithstanding 
that  it  could  raise  food  also  more  cheaply  than  New  York. 

Here  is  another  particular  instance  from  which  no  general 
conclusion  can  be  drawn.  It  may  or  may  not  be  well  for  a 
small  island  inhabited  by  a  handful  of  people  to  purchase 
their  food  and  clothing  and  other  conveniences,  by  giving  for 


23 

them  sugar  and  coffee  and  spices;  but  scarcely  even  a  lunatic 
would  propose  to  100,000,000  of  people  to  do  the  same  thing  ; 
because  the  quantity  of  sugar  and  coffee  and  spices  which 
they  could  find  a  market  for  would  not  procure  them  a  twen- 
tieth part  of  what  they  required  in  other  things. 

We  come  now  to  Professor  Cairnes's  chapter  iv.,  entitled 
"  Free-Trade  and  Protection."  Unfortunately  he  based  the 
main  portion  of  his  argument  upon  the  statistical  deductions 
of  Mr.  David  A.  Wells.  The  Professor  probably  did  not 
know  how  roughly  these  had  been  handled  in  Congress  ;  but, 
being  a  prominent  economist,  he  ought,  one  would  think,  to 
have  distrusted  the  accuracy  of  figures  which  appeared  to 
prove  that  the  real  wages  of  the  people  of  the  United  States 
had  declined  twenty  per  cent  between  the  years  1860  and 
1868.  However,  he  accepted  them  in  full  faith,  and  based 
upon  them  his  main  argument,  which  amounts  to  this:  — 

So  great  a  deterioration  in  the  condition  of  the  people  must 
have  a  cause.  I  look  about  in  every  direction,  and  cannot 
find  anything  to  attribute  it  to,  except  the  Morrill  Tariff. 
Here  we  have  a  suflacient  cause.  It  puts  on  duties  averaging 
forty-seven  per  cent. 

*'  Every  article,  therefore,  produced  in  the  United  States,  wliieh 
would  not  have  been  produced  theie  but  for  the  protective  tariff,  rep- 
resents an  expenditure  of  labor  and  capital  greater  than  would  have 
been  necessary  to  obtain  the  same  article  had  it  been  obtained  under 
free  trade.  In  a  word,  American  labor  and  capital,  as  a  whole,  have, 
effort  for  effort  and  outlay  for  outlay,  been  producing  smaller  results 
since  1861  than  formerly;  and,  this  being  so,  what  other  exf)lanation 
do  we  need  of  the  actual  facts  which  we  encounter, — of  diminished 
returns  on  American  industry,  of  a  fall  in  the  real  wages  of  labor  ?  " 

Scores  of  times  it  has  been  shown  by  American  writers 
that,  when  an  industry  has  been  raised  up  by  protective 
duties,  its  products  have  been  often  cheapened  and  scarcely 
ever  augmented  by  the  amount  of  the  duties.  Scores  of 
times  the  free-trader  has  replied,  Wliere,  then,  was  the  neces- 
sity for  the  duty?  and  scores  of  times  they  have  been  told,. 
The  duty  was  necessary  in  the  first  place  to   establish  the 


24 

industry,  and  afterwards  to  prevent  it  from  being  maliciously 
overwhelmed  by  English  goods  sold  at  a  loss,  which  was  to 
be  more  than  made  np  by  the  higher  prices  obtainable  when 
we  no  longer  were  able  to  help  ourselves. 

It  by  no  means  follows,  then,  that  forty-seven  per  cent  was 
added  to  the  cost  of  articles  caused  to  be  produced  by  the 
Morrill  Tariff.  It  is  almost  certain  that  with  the  tariff  we 
have  still  to  offer  in  foreign  markets  as  great  a  surplus  of  the 
commodities  "  in  raising  which  we  have  an  advantage  "  as  can 
be  well  sold ;  that,  if  we  offered  a  larger  quantity,  the  net  re- 
turns would  be  less  in  the  aggregate  than  they  are  now  ;  and, 
if  so,  the  commodities  produced  by  reason  of  the  tariff  are  just 
so  much  clear  gain.  The  question  was,  "  Are  protective  laws 
a  burthen  to  the  country  imposing  them  ?  "  and  the  Pro- 
fessor surely  made  a  grave  slip  in  undertaking  to  prove  they 
were,  by  assuming  that  they  were  !  K  the  statement  of  Mr. 
Wells  had  been  a  fact,  and  the  average  real  wages  of  the  in- 
habitants of  the  United  States  had  actually  been  reduced 
twenty  per  cent,  there  are  many  other  conceivable  causes  be- 
sides a  tariff.  In  1874  to  1879  there  was  a  serious  fall  in  the 
rate  of  wages  as  measured  b}^  money,  and  also  probably  as  meas- 
ured by  commodities  ;  but  there  has  recently  (1881)  been  an 
enormous  advance.  Did  the  tariff  cause  both  the  decline  and 
the  advance  ?  We  certainly  are  not  called  upon  to  draw  any 
such  absurd  conclusion.  The  fall  in  1873-74  was  sufficiently 
accounted  for  by  the  sudden  cessation  by  the  community 
from  the  construction  of  new  instruments  of  production,  and 
the  recent  advance  is  sufficiently  accounted  for  by  the  move- 
ment in  the  opposite  direction  now  going  on.  When  the 
community  is  fully  employed,  the  gross  annual  product  is 
large  :  there  is  much  to  divide,  and  wages  and  profits  advance 
together.  When  a  portion  of  the  community  is  dismissed  into 
idleness,  the  annual  product  is  diminished:  there  is  less  to 
divide,  and  wages  and  profits  fall  together. 

Professor  Cairnes  feels  great  anxiety  about  the  Illinois 
farmer,  lest  he  should  not  get  enough  for  his  corn,  and  have 
to  pay  too  much  for  other  things.  He  and  J\I.  Mongredien 
would  like  to  have  us  confine  ourselves  to  that  in  which  we 


25 

have  an  advantage,  and  take  the  other  things  from  England. 
The  farmers  could  take  81,000,000,000,  and  the  rest  of  the 
community  converted  into  farmers  could  take  another  $1,000,- 
000,000 ;  and,  twenty-five  years  hence,  when  we  number 
100,000,000  of  people,  we  could  take  twice  as  much,  or  say 
84,000,000,000  of  other  things.  What  would  be  the  price  of 
the  other  things  under  such  circumstances,  —  whether  double 
or  treble  what  it  is  now,  —  and  what  the  price  of  the  corn,  — 
whether  two-thirds  or  half  of  what  it  is  now, —  ought  not 
to  trouble  political  economists  ! 

On  looking  further,  I  see  I  am  in  error,  and  that  Pro- 
fessor Cairnes  does  not  agree  with  M.  Mongredien.  He  does 
not  expect  us  all  to  become  farmers  ;  on  the  contrary,  he  tells 
us  that  — 

"  (1)  As  regards  the  industries  of  raw  produce,  protection  does  not 
call  into  existence  a  single  branch  of  production  which  would  not 
equally  have  existed  under  free  trade,  —  it  merely  alters  the  propor- 
tions in  which  such  industries  are  carried  on,  hindering  their  natural 
and  healthy  development ;  (2)  in  the  domain  of  manufacturing  indus- 
try it  is  equally  inefficacious  as  a  means  of  creating  variety  of  pursuits, 

—  for  if  on  the  one  hand  it  secures  a  precarious  existence  for  certain 
kinds  of  manufactures,  on  the  other,  by  artificially  enhancing  the  price 
of  raw  material,  it  discourages  other  kinds  which  in  its  absence  would 
grow  and  flourish  ;  while  (3)  over  and  above  all  these  injurious  effects, 
it  vitiates  the  industrial  atmosphere  by  engendering  lethargy,  routine, 
and  a  reliance  on  legislative  expedients,  to  the  great  discouragement  of 
those  qualities  on  which,  above  all,  successful  industry  mainly  depends, 

—  energy,  economy,  and  enterprise.  To  conclude,  having  regard  to 
die  geographical  position,  extent  of  territory,  and  extraordinary  natural 
resources  of  the  United  States,  as  well  as  to  the  character  of  its  'people, 
trained  in  all  the  arts  of  civilization,  and  distinguished  beyond  others  by 
their  eminent  mechanical  and  business  talents,  there  seems  no  reason 
that  they  should  not  take  a  position  of  commanding  influence  'in  the 
world  of  commerce,  —  a  position  to  which  no  other  people  on  earth  could 
aspire.  .  But,  to  do  this,  they  must  eschew  the  miserable  and  childish 
jealousy  of  foreign  competition  which  is  now  the  animating  principle  of 
their  commercial  policy.  If  they  desire  to  command  a  market  for 
their  products  in  all  quarters  of  the  world,  they  must  be  prepai-ed  to 
admit  the  products  of  other  countries  freely  to  their  markets,  and  must 


26 

learn  to  seek  the  benefits  of  international  trade,  not  in  the  vain  ambi- 
tion of  underselling  other  countries,  and  so  making  them  pay  tribute  in 
gold  and  silver  to  the  United  States,  but  in  that  which  constitutes  its 
proper  end  and  only  rational  purpose,  —  the  greater  cheapening  of 
commodities  and  the  increased  abundance  and  comfort  which  result  to 
the  whole  family  of  mankind." 

But  the  "  world  of  commerce  "  in  which  we  are  invited  to 
partake  is  a  world  in  which  Great  Britain,  by  immense  efforts, 
—  warlike,  industrial,  diplomatic,  social,  and  literary,  —  has 
been  able  to  find  markets  for  only  about  twelve  hundred  mil- 
lions of  dollars  in  value  of  the  products  of  her  mechanical  and 
manufacturing  industries ;  while  our  own  market,  which  we 
are  invited  to  share  with  Great  Britain,  is  now  some  four  or 
five  times  as  great,  and  pretty  sure  to  be  ten  times  as  great  in 
twenty-five  years.  The  invitation  has  a  humorous  aspect, 
and  might  be  passed  over  with  a  good-natured  smile,  if  the 
matter  were  not  one  of  such  transcendant  importance.  Any 
attempt  to  put  his  recommendations  in  practice  would  place 
in  peril  a  large  proportion  of  our  capital  and  industry,  and 
also  the  high  rate  of  real  wages  which  we  have  thus  far  been 
able  to  sustain.  The  farmer  is  not  very  likely  to  sanction  it. 
He  knows  too  well  what  protection  he  gets  from  the  removal 
of  nearly  half  the  population  from  the  soil  ;  and  he  knows 
too  well  how  his  farm  rises  in  value  when  the  mill  or  the 
forge  settles  down  beside  him.  No !  the  men  who  thought- 
lessly favor  such  movements  are  professional  and  literary 
men  and  the  possessors  of  incomes.  All  tliese  are  apt  to 
think  it  would  be  well  if  they  could  get  their  clothing  and 
other  conveniences  cheaply  from  England.  They  forget  that 
with  a  diminution  of  the  rate  of  wages  must  also  come  a 
diminution  of  fees,  salaries,  profits,  and  incomes.  When  the 
incomes  from  mills,  forges,  railroads,  houses,  all  fell  off,  they 
would  lament  the  day  that  they  assisted  to  inaugurate  so 
perilous,  so  pernicious,  an  experiment. 

Professor  Cairnes  tells  us  that  protection  does  nothing  to 
diversify  industries.  His  reasoning  has  been  found  exceed- 
ingly liable  to  error  in  other  instances,  and  is  exceedingly 
unsubstantial  in  this.     Facts  all  over  the  world  confute  him. 


27 

Let  us  now  turn  over  the  leaves  of  a  livelier  author,  M. 
Bastiat.  He,  at  all  events,  entertains  us.  He  gives  us  a 
most  amusing  petition  from  the  manufacturers  of  gas  for  the 
abolition  of  sunshine.  We  laugh  ;  but  we  remember  that 
no  one  proposes  to  employ  labor  to  produce  an  inferior  substi- 
tute for  what  can  be  had  for  nothing.  Nor  does  anybody 
propose  to  raise  pineapples  under  glass  as  a  substitute  for  the 
tropical  product.  The  climate  is  too  much  against  us,  except 
indeed  when  the  article  to  be  produced  is  of  sufficient  im- 
portance to  make  it  worth  our  while  to  set  civilization  against 
sunshine,  as  was  done  in  the  case  of  sugar  from  the  beet,  and 
done  with  complete  success. 

Another  point  which  Bastiat  urges  with  great  wit  and 
vivacity  is  that  our  object  in  building  railroads  and  steam- 
ships and  telegraphs  is  to  facilitate  intercourse,  —  to  re- 
move impediments  to  intercourse.  But  the  moment  we  have 
done  this  we  set-  about  undoing  it,  by  enacting  protective  and 
prohibitory  tariffs,  which  are  equivalent  to  breaking  up  the 
railroad  or  burning  the  steamship,  or  at  least  the  equivalent 
of  a  serious  diminution  of  their  utility.  But  when  we  build 
a  railroad  or  a  steamship  we  know  that  these  beneficent  in- 
struments, like  most  others,  may  be  perverted  to  pernicious 
uses.  They  are  excellent  for  carrying  passengers ;  but  it 
does  not  follow  that  they  should  be  used  by  every  passenger. 
A  thief,  a  spy,  a  murderer,  a  person  afflicted  with  the  small- 
pox, may  surely  be  refused  a  passage,  without  subjecting  the 
directors  to  a  charge  of  absurdity.  They  are  also  excellent 
for  carrying  freight ;  but  they  do  not  become  any  less  excel- 
lent when  their  managers  forbid  infectious  or  dangerous  or 
injurious  commodities  being  conveyed  by  them. 

We  form  these  instruments  of  locomotion  to  promote  such 
commerce  as  for  good  and  sufficient  reasons  we  deem  advan- 
tageous, and  the  multiplication  of  railroads  and  steamships 
and  their  good  dividends  bear  witness  to  the  fact  that  there  is 
plenty  for  them  to  do,  in  spite  of  the  wicked  and  absurd  pro- 
tective laws.  Men  have  not  yet  found  reason  to  adopt  the 
general  proposition,  that  Whatever  traffic  is  carried  on  by 
railroads  or  steamships  is  ipso  facto  and  necessarily  beneficial ! 


28 

Nor  yet  this  other  general  proposition,  To  forbid  any  traflBc 
which  is  carried  on  by  means  of  a  raih'oad  or  steamship  is 
absurd  and  ridiculous.  Such  arguments,  when  stripped  of 
the  wit  and  rhetoric  by  which  Bastiat  and  his  imitators  have 
covered  them  up,  need  no  refutation.  To  show  them  as  they 
are  is  sufficient. 

One  who  reads  Bastiat's  admirable  chapter  upon  Capital 
and  Interest  is  filled  with  wonder  at  the  venerable  blunders 
found  in  other  parts  of  his  work.     As  one  example,  he  says  : 

"On  what  depends  the  demand  for  labor?  On  the  quantity  of 
disposable  national  capital.  And  the  law  which  says,  '  Such  or  such 
an  article  shall  be  limited  to  home  production  and  no  longer  imported 
from  foreign  countries,'  can  it  in  any  degree  increase  this  capital? 
Not  in  the  least.  This  law  may  withdraw  it  from  one  course  and 
transfer  it  to  another,  but  cannot  increase  it  one  penny.  Then  it  can- 
not increase  the  demand  for  labor." 

Let  us  see.  A  nation  is,  as  before  supposed,  producing  an- 
nually commodities  worth  $6,000,000,000,  and  it  has  normally 
in  stock  $1,000,000,000,  being  commodities  in  the  hands  of 
producers  or  dealers  and  advanced  upon  by  banks  or  moneyed 
men. 

Now  the  law  steps  in  and  says :  There  is  an  article  (say 
woollen  goods)  for  which  there  is  a  large  demand  in  the 
country,  but  which  has  hitherto  been  brought  from  abroad. 
"We  are  under  no  disability  as  to  climate.  When  we  have 
acquired  the  requisite  skill,  we  can  produce  with  as  little 
cost  (in  labor  and  abstinence)  as  any  other  country.  Let 
there  be  a  duty  placed  upon  importations  sufficient  to  amply 
protect  the  new  industry. 

Under  these  encouragements  capitalists  all  over  the  coun- 
try subscribe  to  establish  woollen  mills,  to  build  the  mills 
and  furnish  the  floating  capital,  and  then  to  proceed  to 
work.  Let  the  movement  be  of  large  dimensions,  say  to 
the  extent  of  $300,000,000  the  first  year  paid  away  to  work- 
men. The  $1,000,000,000  of  unemployed  capital  is  ample 
without  disturbing  any  previous  industry.  It  is  more  than 
three   times  what   is   ample.      So    far,   so    good !     But   the 


29 

money  paid  out  for  labor  will  nearly  all  be  spent  by  the 
laborers — for  what?  For  the  very  commodities  which  con- 
stitute the  unemployed  capital.  The  producers  of  these, 
finding  an  extra  demand  to  the  extent  of  nearly  a  third  of 
their  stocks,  are  all  along  in  condition  to  increase  their  pro- 
duction by  employing  more  labor  and  paying  more  wages. 
They  may  do  this  to  nearly  the  extent  of  '$300,000,000,  with 
the  result  of  producing  commodities  worth  more  than  twice 
the  wages  disbursed.  Here,  then,  the  community  at  the  end 
of  the  year  finds  its  floating  capital  about  the  same  as  at  the 
beginning,  and  its  fixed  capital  increased  $300,000,000  ;  and 
its  laborers  have  had  and  used  during  the  year  $600,000,000 
more  than  they  would  have  had  without  the  law.  But  M. 
Bastiat,  as  we  have  seen  above,  lays  it  down  as  the  indubi- 
table teaching  of  his  science,  that  the  law  cannot  increase  tho 
capital  disposable  for  the  payment  of  wages  a  single  penny. 
This  is  the  patriarch  of  free-trade  sophisms  or  blunders, 
having  been  born  in  the  house  of  Adam  Smith  more  than  a 
hundred  years  ago. 

As  another  example  of  venerable  blunders,  take  the  follow- 
ing.    He  says  ;  — 

"  France,  according  to  our  supposition,  manufactures  10,000,000  of 
hats  at  fifteen  francs  each.  Let  us  now  suppose  that  a  foreign  pro- 
ducer brings  them  into  our  market  at  ten  francs.  I  maintain  tliat 
national  labor  is  thus  in  no  wise  diminished.  It  will  be  obliged  to 
produce  the  equivalent  of  the  100,000,000  francs  which  go  to  pay  for 
the  10,000,000  of  hats  at  ten  francs,  and  then  there  remains  to  each 
buyer  five  francs,  saved  on  the  purchase  of  his  hat,  or,  in  total,  50,- 
000,000  francs,  which  serve  for  the  acquisition  of  other  comforts  and 
the  encouragement  of  other  labor." 

Let  us  see,  France,  according  to  his  first  supposition,  pro- 
duced 10,000,000  of  hats  selling  for  150,000,000  francs;  but 
the  recipients  of  these  150,000,000  francs  did  not  eat  or  drink 
or  live  in  them.  They  exchanged  them  for  other  150,000,000 
francs  of  products.  Here,  then,  were  300,000,000  francs  of 
French  products,  every  franc  of  which  (see  M.  J.  B.  Say) 
was  net  income  to  some  Frenchman.  Total  net  income,  then, 
under  this  supposition,  300,000,000  francs. 


30 

Under  the  other  supposition,  foreigners  bring  in  10,000,000 
hats  and  receive  French  products  worth  100,000,000  francs. 
The  French  consumers  get  their  hats  the  same  as  before  ; 
and,  if  they  spend  the  whole  of  the  50,000,000  francs  saved 
by  the  change  to  a  foreign  producer,  there  will  be  an  addi- 
tional demand  for  50,000,000  francs  of  varied  products.  The 
total  French  product,  then,  under  this  supposition,  will  be 
150,000,000  francs,  every  franc  of  which  will  be  net  individ- 
ual income  to  somebody.  Total  net  income,  then,  under  this 
supposition,  150,000,000  francs.  The  aggregate  of  the  French 
incomes,  then,  has  been  reduced  150,000,000  francs  by  the 
change  from  a  French  to  a  foreign  producer. 

But  the  hat-makers,  you  may  say,  will  do  something  else. 
But  in  saying  this  you  introduce  a  new  element  into  the 
question  ;  and,  moreover,  you  are  by  no  means  warranted  in 
your  assumption.  Mr.  John  Stuart  Mill  ought  to  be  a  good 
enough  authority  for  free-traders,  and  he  says,  in  regard  to  a 
similar  case  (see  book  i.  chap.  v.  sec.  9)  :  — 

"  The  very  sum  which  the  consumer  now  employs  in  buying  velvet 
(for  velvet,  read  English  hats)  formerly  passed  into  the  hands  of  jour- 
neymen bricklayers  (for  journeymen  bricklayers,  read  French  hat- 
makers),  who  expended  it  in  food  and  necessaries,  which  they  now 
either  go  without  or  squeeze^  hy  their  competition,  from  the  shares  of 
other  laborers." 

The  change  of  the  demand  for  hats  from  France  to,  say, 
England  does  not  increase  the  demand  for  other  French  prod- 
ucts a  single  franc,  even  on  the  supposition  that  the  hat  con- 
sumers spend  all  they  save  in  the  price  of  hats  upon  other 
products.  If  they  capitalize  any  of  their  savings,  the  gross 
demand  for  other  French  products  will  be  less  than  before. 
The  hypothesis,  then,  finds  no  funds  for  the  support  of  the 
displaced  French  hat-makers.  They  must  starve,  or  squeeze 
a  living  (by  competition)  out  of  the  remuneration  of  other 
laborers. 

This  is  not  only  a  venerable  blunder ;  but  worse  still,  it  is 
a  dead  blunder.  It  was  killed  by  Sir  John  Barnard  Byles  in 
the  "  Sophisms  of  Free-Trade,"  in  1849,  and  witness  was 
borne  to  its  peaceful  interment  by  William  Lucas  Sargant  in 


31 

the  "Science  of  Social  Opulence,"  a  -work  favoring  free  trade, 
published  in  1856.  But  this  ghost  of  a  blunder  so  long 
buried  was  produced  afresh  as  a  valid  argument  in  j\I.  Bas- 
tiat's  "  Sophisms  of  Protection,"  translated  for  the  instruction 
of  the  American  public  under  the  auspices  of  "  The  American 
Free-Trade  League." 

A  large  proportion,  however,  of  American  converts  to  free 
trade  become  so  really  through  influences  which  are  quite 
natural  and  amiable,  but  which  are  perfectly  innocent  of 
logic.  A  vast  host  of  wealthy  and  cultivated  persons  every 
year  visit  Great  Britain,  where  they  find  almost  every  man, 
woman,  and  child  a  free-trade  missionary,  ready  to  ten- 
derly influence  and  instruct  their  less  fortunate  cousins  from 
the  western  side  of  the  Atlantic.  Every  man,  woman,  and 
child  is  completely  possessed  with  the  conviction  that  polit- 
ical economy  is  already  a  science,  but  one,  alas !  only  under- 
stood in  England.  Our  ignorance  is  gently  forgiven,  our 
wayward  perversity  is  borne  with,  any  wavering  in  our  convic- 
tions is  greeted  with  encouragement  and  suitable  applause,  any 
symptoms  of  actual  conversion  are  received  with  unmeasured 
caresses.  The  stateliest  doors  fly  open  to  the  truly  repentant 
protectionist;  and  the  highest  talent  of  the  land  can  find 
time  to  pause  approvingly  and  to  recognize  that  the  individ- 
ual who,  having  been  born  in  utter  darkness,  can  still  thus 
bare  his  eyes  to  the  almost  overpowering  glare  of  truth,  miist 
possess  not  only  a  good  heart,  but  also  a  commanding  intel- 
lect !  A  large  portion  of  the  beliefs  and  opinions  of  men  are 
rather,  as  it  were,  inhaled  or  absorbed  from  the  social  atmos- 
phere around  them,  than  arrived  at  by  any  process  of  rea- 
son. We  find  it  easy  and  pleasant  to  agree  with  those  who 
treat  us  with  delicacy  and  attention,  and  almost  anything 
seems  logical  which  brings  us  into  accord  with  the  great,  the 
wise,  and  the  good.  We  do  not  reflect  tliat  Bacon,  in  his 
time,  could  not  easily  have  avoided  believing  in  witchcraft ; 
that  Samuel  Johnson  was  ready  to  be  scared  out  of  his  wits  by 
reports  of  a  ghost ;  and  that  the  present  opinion  of  Mr.  Glad- 
stone or  other  great  thinkers  and  scholars  in  favor  of  free  trade 
has  intrinsically  no  more  value  than  had  theirs  in  favor  of  the 


32 

beliefs  -which  the  world  has  now  so  entirely  outgrown.  The 
universality  of  an  opinion  is  so  far  from  being  proof  of  its 
correctness,  that  it  should  rather  inspire  a  fear  of  erior,  —  a 
fear  that  only  one  side  of  the  question  liad  been  heard. 

It  is  really  curious  to  observe  the  unanimity  with  which 
our  English  cousins  believe  themselves  masters  of  political 
economy ;  but  one  of  themselves,  an  author  who  has  made 
valuable  additions  to  the  materials  of  political  economy, 
declares,  in  reference  to  Great  Britain,  that 

"  Political  economy  is  little  understood,  even  by  educated  men.  A 
few  of  its  doctrines,  indeed,  —  those,  for  example,  relating  to  the  divi- 
sion of  labor  and  free  trade,  —  have  taken  their  place  in  the  familiar 
philosopliy  of  Western  Europe.  Men  learn  them,  however,  by  rote, 
not  by  study." 

But  the  traveller  is  not  aware  of  this.  He  is  in  contact 
continually  with  free-trade  opinions,  and  gradually  acquires 
them  by  contact  or  by  infection,  just  as  he  would  catch  the 
small-pox  or  a  malarial  fever  ;  and,  in  this  condition  of  mind, 
he  returns,  to  be  vexed  and  worried  and  made  to  pay  out 
money  by  the  custom-house  authorities.  Here  personal  irri- 
tation comes  in  to  complete  the  conversion.  He  sees  very 
clearly  what  he  has  to  pay ;  he  does  not  see  by  any  means  so 
clearly  that  the  ample  income  which  made  his  travels  possible 
had  sprung  from  the  system  of  which  the  custom-house  an- 
noyances were  a  necessary  portion.  He  becomes  a-  hater  of 
all  tariffs,  as  obstructions  to  intercourse,  and  a  ready  listener 
to  such  sophistries  as  the  following,  put  forth  by  Mr.  David 
A.  Wells  since  his  conversion  to  free  trade  during  a  visit  to 
England.     He  says,  in  his  '•  Creed  of  Free-Trade : "  — 

"  The  highest  right  of  property  is  the  right  to  freely  exchange  it 
for  other  property.  Any  system  of  laws  which  denies  or  restricts  this 
right,  for  the  purpose  of  subserving  private  or  class  interests,  reaffirms 
in  effect  the  principle  of  slavery.  "Whatever  facilitates  or  cheapens  the 
interchange  of  commodities  or  services  —  good  roads,  the  locomotive, 
the  steamship,  or  the  telegraph  —  promotes  abundance,  and  conse- 
quently the  aggregate  of  human  comfort  and  happiness.  Whatever, 
on  tlie  other  hand,  restricts  or  makes  costly  the  exchange  of  commodi- 


33 

ties  or  services  —  be  it  in  the  nature  of  bad  roads,  high  mountains, 
tempestuous  oceans,  swamps,  deserts,  or  restrictive  laws  —  increases 
scarcity,  and  consequently  the  aggregate  of  human  poverty  and  dis- 
comfort." 

This  seems  admirable  reasoning  to  one  whose  preconceived 
opinions  are  all  in  favor  of  free  trade.  Let  us  see  whether  it 
is  so. 

The  first  sentence  contains  a  proposition  altogether  foreign 
to  political  economy,  which  concerns  itself  solely  with  ques- 
tions relating  to  social  opulence.  This  proposition  belongs  to 
the  domain  of  law  and  to  the  domain  of  social  science,  of 
which  political  economy  is  only  a  portion,  a  portion  in  which 
this  question  has  no  place.  That  it  is  dragged  into  a  discus- 
sion regarding  free  trade  shows  a  consciousness  of  weakness. 
But  a  lawyer  or  a  professor  of  social  science  would  meet  with 
a  smile  the  assertion  that  "  the  right  of  every  possessor  of 
property  to  exchange  it  for  other  property  is  so  full,  uni- 
versal, and  sacred,  that  the  whole  community  must  abstain 
from  any  regulation  thereof  "  ! 

Even  if  the  pecuniary  interests  of  some  individuals  were  in- 
/wrec?,  these  ought  to  give  way  to  the  interests  of  the  whole  com- 
munity ;  and  to  liken  such  pecuniary  interests  or  rights  to  the 
rights  to  life  and  liberty  invaded  by  slavery,  is  a  monstrous 
sophism.  The  insinuation  that  the  restriction  of  the  right  of 
exchange  by  protection  is  made  in  order  to  subserve  private  or 
class  interests,  is  to  carry  the  discussion  entirely  out  of  the  do- 
main of  truth,  as  the  whole  aim  and  object  of  protection  is  to 
increase  the  total  annual  product  for  the  benefit  of  the  com- 
munity as  a  whole.  That  good  roads,  the  locomotive,  the 
steamship,  and  the  telegraph  promote  abundance  in  all  cases 
is  not  true.  They  promote  abundance  when  they  are  re- 
stricted to  beneficent  exchanges  ;  they  promote  scarcity  when 
used  to  carry  on  a  commerce  which,  after  destroying  our 
means  of  helping  ourselves,  can  only  give  us  a  fifth  or  a  tenth 
of  what  we  enjoyed  before.  We  have  a  natural  advantage  in 
producing  cotton,  tobacco,  wheat,  and  a  few  other  products 
which  are  salable  abroad ;  but  the  market  for  these  products 
is  not  sufficiently  great,  nor  can  it  become  sufficiently  great, 

6 


34 

to  warmnt  the  employino;'  upon  them  one-half  our  present  or 
a  fourth  of  the  population  we  shall  have  in  1905.  To  endea- 
vor to  confine  ourselves  to  these  would  be  to  transfer  the 
vrhole  of  our  natural  advantages  to  the  foreigner,  and  to  re- 
duce ourselves  to  the  condition  of  Ireland,  Turkey,  India, 
and  other  countries  which  are  prevented  from  helping  them- 
selves and  compelled  to  look  to  England  for  mechanical  and 
manufactured  products.  This  is  an  eminently  practical  ques- 
tion, upon  which  the  rhetorical  sentences  quoted  from  Mr. 
Wells  have  no  bearing  whatsoever.  The  following  is  equally 
irrelevant.     He  says :  — 

"In  the  absence  of  all  freedom  of  exchange  between  man  and  man, 
civilization  would  obviously  be  impossible  ;  and  it  would  seem  to  stand 
to  reason  that  to  the  degree  in  which  we  impede  or  obstruct  the 
freedom  of  exchange,  —  or,  what  is  the  same  thing,  commercial  in- 
tercourse, —  to  that  same  degree  we  oppose  the  develojDment  of  civili- 
zation." 

But  this  is  reasoning  from  a  "  particular  "  proposition  as  if 
it  were  universal.  Some  exchanges  are  necessary  conditions 
of  civilization,  but  others  may  be  highly  prejudicial  to  civili- 
zation ;  there  may  be  many  exchanges  which  must  be  sup- 
pressed in  order  to  reach  the  highest  civilization.  The 
suppression  of  some  foreign  exchanges  may  bring  into  exist- 
ence many  times  the  number  of  more  advantageous  exchanges 
at  home. 

Mr.  Wells  thinks  it  strange  that  the  American  people,  who 
insist  upon  free  trade  among  themselves,  should  object  to 
free  trade  with  foreign  countries,  and  thinks  that  "  foreign 
trade  presents  no  element  peculiar  to  itself." 

This  is  a  strange  assertion.  It  would  seem  that  foreign 
trade  is  subject  to  foueign  legislation,  and  not  to  domestic 
legislation  ;  that  foreign  trade  is  especially  liable  to  inter- 
ruption from  war ;  that  foreign  trade  (especially  with  Eng- 
land and  Europe)  is  more  distant  as  to  markets ;  that 
foreign  trade  is  carried  on  with  nations  having  very  differ- 
ent conditions  of  production,  and  haviug  both  the  will  and 
the  ability  to  greatly  injure  and  even  crush  our  industries  by 


35 

selling  products  at  a  loss,  for  the  very  purpose  of  driving  us 
from  our  own  markets  and  then  making  us  pay  high  prices. 
It  would  seem  that  an  exchange  with  the  foreigner  provokes 
only  one  production,  where  a  domestic  exchange  provokes 
two  ;  and  that  this  alone  is  of  supreme  importance,  inasmuch 
as  the  whole  price  of  everything  produced  constitutes  net  in- 
dividual income  to  somebody,  as  is  proved  by  J.  B.  Say. 

Volumes  could  be  filled  with  examples  of  the  errors  com- 
mitted by  economists  of  the  English  school  in  their  deductive 
reasoning.  We  have  seen  that  Mr.  J.  S.  Mill,  who  gave  the 
world  an  admirable  treatise  upon  the  science  of  logic,  could 
yet  amaze  his  own  scholars  by  giving  them  one  of  the  best 
possible  specimens  of  the  fallacy  called  "  Changing  the  Pre- 
mises," and  thus  arrive  at  a  false  conclusion  upon  a  vital 
question  in  political  economy.  Both  he  and  Professor 
Cairnes,  we  have  seen,  apply  to  commodities  the  argumenta- 
tion which  is  only  true  with  respect  to  all  values,  of  which 
commodities  form  only  a  small  portion.  By  this  error  they 
come  to  the  conclusion  that  a  glut  is  impossible,  —  a  conclu- 
sion which  is  contrary  to  fact,  and  contradicted  by  all  correct 
deductive  raasoning.  Every  economist  of  the  English  school 
enjoins  upon  us  to  buy  in  the  cheapest  market  with  some 
portion  of  our  own  products  in  raising  which  we  have  an 
advantage.  We  reply,  that  the  products  in  which  we  have 
an  advantage  are  not  salable  abroad  to  an  extent  which 
would  pay  for  one-third  part  of  the  other  products  that  we 
now  make  for  ourselves.  We  are  50,000,000,  we  say,  and 
require,  and  actually  obtain  and  enjoy,  annually,  commodi- 
ties produced  by  the  mechanical  and  manufacturing  arts  of 
the  value  of  at  least  $4,000,000,000.  In  twenty-five  years 
we  shall  be  100,000,000.;  and,  if  we  continue  the  protective 
policy,  we  shall  no  doubt  then  annually  obtain  and  enjoy 
similar  commodities  to  the  value  of  $10,000,000,000,  — a  sum 
equal  to  about  three  times  the  total  annual  consumption  of 
the  British  Islands,  of  which  consumption,  be  it  noted,  only 
a  small  fraction  could,  under  any  possible  circumstances,  be 
taken  from  the  United  States.  Great  Britain  cannot  supply 
our  wants  ;  but  she  can,  and,  if  we  will  allow  her  to  do  so, 


36 

she  will,  prevent  our  supplying  them  by  our  own  industry. 
She  would  give  us  a  comparatively  small  quantity  cheap,  and 
we  could  go  without  the  balance.  This  is  the  only  kind  of 
abundance  (!)  which  free  trade  ever  can  produce  for  the 
United  States. 

This  is  the  abundance  which  free  trade  gives  to  India.  In 
that  country  are  to  be  found  200,000,000  of  people  of  a  highly 
acute  and  industrious  race.  To  be  on  a  par  with  the  United 
States,  their  annual  product  should  be  about  125,000,000,000 
in  value.  It  is  in  reality  far  less  than  a  tenth  of  that  sum  ; 
and  every  few  years  there  is  (now  in  this,  then  in  that 
province)  a  famine  that  carries  off  from  one  to  two  millions 
of  human  creatures.  And  what  advantage  does  Great  Brit- 
ain obtain  from  this  deplorable  condition  of  affairs?  The 
pitiful  advantage  of  selling  in  India  some  $120,000,000  worth 
of  English  products,  and  making  thereon  perhaps  a  profit  of 
$25,000,000.  Where  England  profits  a  dollar,  India  foregoes 
producing  a  thousand. 

Similar  has  been  the  effect  of  English  free  trade  upon  Ire- 
land, Portugal,  and  Turkey,  and  upon  her  own  colonies. 
Deductive  reasoning  leads  directly  to  the  conclusion  that  the 
only  way  in  which  the  British  Islands,  with  30,000,000  of 
people,  can  be  the  workshop  of  the  world,  is  by  preventing 
the  world  from  helping  itself;  and,  on  the  other  hand,  the 
imagination  would  fail  to  picture  the  magnificence  of  her 
empire  after  a  period  of  fifty  years,  should  she  set  herself 
resolutely  to  the  task  of  developing  in  Ireland,  in  India,  and 
in  the  colonies  the  arts  and  sciences  which  she  herself  pos- 
sesses. She  has  a  heart  large  enough  to  adopt  so  beneficent  a 
policy.  She  does  not  do  so, 'because  sophistical  arguments 
have  fixed  upon  her  a  belief  which  future  ages  will  wonder 
at,  as  we  now  wonder  at  her  once  equally  unanimous  belief 
in  the  existence  of  witchcraft. 


REVIEW 


OF 


BASTIAT'S    SOPHISMS    OF  PROTECTION. 


The  preface  tells  us  that  "  the  primary  object  of  the  League 
is  to  educate  public  opinion,  to  convince  the  people  of  the 
United  States  of  the  folly  and  wrongfulness  of  the  protective 
system."  It  quotes  Senator  Morrill  as  saying  that  "  the  year 
1860  was  a  year  of  as  large  production  and  as  much  general 
prosperity  as  any,  perhaps,  in  our  history  " ;  but  these  words 
would  probably  bear  a  different  aspect  if  read  with  the  con- 
text, as  the  condition  of  that  year  was  very  differently  de- 
scribed by  H.  C.  Carey  as  follows :  — 

"  "What  it  is  which  may  be  positively  affirmed  in  reference  to  that 
Jlucluation  of  policy  which  struck  down  the  great  iron  manufacture,  at 
the  moment  at  which  it  had  just  begun  to  exhibit  its  power  for  good, 
would  seem  to  be  this :  that  in  the  British  monopoly  system  which 
thereafter  followed,  we  added  something  less  than  forty  per  cent,  to  our 
population  ;  seventy,  to  our  machinery  for  water  transportation ;  and  five 
hundred,  to  that  required  for  transportation  by  land ;  meanwhile  ma- 
terially diminishing  the  quantity  of  iron  applied  to  works  of  production. 
When  you  shall  have  carefully  studied  all  this,  you  may  perhaps  find 
yourself  enabled  to  account  for  the  facts,  that  in  the  closing  year  of 
the  free  trade  period,  railroad  property  that  had  cost  more  than  a 
thousand  millions  could  not  have  been  sold  for  three  hundred  apd 
fifty  ;  that  ships  had  become  ruinous  to  nearly  all  their  owners  ;  that 
factories,  furnaces,  mills,  mines,  and  workshops  had  been  everywhere 
deserted;  that  hundreds  of  thousands  of  working  men  had  been 
everywhere   seeking,   and   vainly   seeking,  to  sell   their  labor;    that 


4  REVIEW  OP   BASTIAT'S   SOPHISMS  OP   PROTECTION. 

immigration  had  heavily  declined ;  that  pauperism  had  existed  to  an 
extent  wholly  unknown  since  the  great  free  trade  crisis  of  1842 ;  that 
bankruptcies  had  become  general  throughout  the  Union ;  that  power 
to  contribute  to  the  public  revenue  had  greatly  diminished ;  and 
finally,  that  the  slave  power  had  felt  itself  to  have  become  so  greatly 
strengthened  as  to  warrant  it  in  entering  on  the  Great  Rebellion." 

So  much  for  one  of  the  premises  of  the  preface.  Another 
of  the  premises  is  a  quotation  from  Miss  Martineau  made  to 
show  that  the  superiority  of  Great  Britain  in  manufactures 
was  not  attained  by  means  of  protection,  but  that  protection 
had  brought  Great  Britain  to  the  verge  of  ruin  in  1842. 

But  the  superiority  of  Great  Britain  was  gained  long  before 
1842.  The  troubles  at  that  time  were  the  result  of  over- 
trading, of  over-pushing  of  the  manufacturing  industries. 
Sir  Robert  Peel  afterwards  lost  his  head,  and  yielded  to  the 
Free  Trade  League,  who  were  waging  war  upon  the  land- 
owners, and  seeking  to  make  the  prosperity  of  England 
hang,  as  Carlyle  forcibly  said,  upon  being  able  to  manufac- 
ture cottons  a  farthing  a  yard  cheaper  than  other  people. 
The  millocracy  triumphed  over  the  landowners,  and,  for- 
tunately for  England,  the  gold  of  California  and  Australia 
brought  about  a  general  improvement  in  trade,  which  post- 
poned the  consequences  for  a  long  period.  But  they  are 
seen  now  in  Ireland,  and  may  soon  be  seen  in  England. 
Meanwhile  free  trade  has  not  prevented  scenes  in  England 
quite  equal  to  those  pictured  by  Miss  Martineau.  They 
occurred  from  1866  to  1870  ;  but  quotations  would  need- 
lessly swell  this  article. 

The  preface  adds, — 

"  Again,  it  is  said  there  is  need  of  diversifying  our  industries,  as 
though  industry  would  not  diversify  itself  sufficiently  through  the 
diverse  tastes  and  predilections  of  individuals, —  as  though  it  was 
necessary  to  supplement  the  work  of  the  Creator  in  this  behalf  by 
human  enactments  founded  upon  reciprocal  rapine." 

The  "  work  of  the  Creator  "  and  "  reciprocal  rapine  "  are 
good  rhetoric :  they  are  not  logic.  They  take  for  granted  the 
question  which  is  to  be   proved.      The   pretty  alliteration 


REVIEW   OF  BASTIAT  S   SOPHISMS   OF  PROTECTION.  5 

might  delight  a  doctrinaire :  it  would  produce  no  effect 
upon  the  masculine  judgment  of  a  Napoleon,  against  whom 
Bastiat  modestly  puts  himself. 

We  come  now  to  Chapter  I.,  entitled,  "Abundance, — 
Scarcity." 

Throughout  this  chapter  M.  Bastiat  supposes  that  abun- 
dance and  cheapness  are  necessarily  coexistent.  He  does  not 
know,  or  he  does  not  appear  to  know,  that  a  low  price  is 
perfectly  compatible  with  great  scarcity  ;  that  abundance 
exists  only  where  a  large  supply  is  co-existent  with  a  large 
effective  demand  ;  that  it  is  in  vain  to  offer  things  for  a  little 
money  to  one  who  has  no  money,  and  no  work  by  which  to 
earn  money.     At  the  end  he  says  : — 

"  But  it  is  answered,  if  we  are  inundated  with  foreign  goods  and 

produce,  our  coin    will    leave    the    country Well,  and  what 

matters  that  ?  Man  is  not  fed  with  coin.  He  does  not  dress  in  gold, 
nor  warm  himself  with  silver.  What  difference  does  it  make  whether 
there  be  more  or  less  coin  in  the  country,  provided  there  be  more 
bread  in  the  cupboard,  more  meat  in  the  larder,  more  clothing  in  the 
press,  and  more  wood  in  the  cellar  ?  " 

Yes  !  provided  ;  but  how  would  it  be  provided  there  was 
much  less  of  all  these  things  ? 

Did  not  M.  Bastiat  know  that  the  very  fact  of  the  coin 
leaving  the  country  proved  that  the  home  industries  were 
not  adequate  to  pay  for  the  importations,  and  that  these 
must  therefore  cease  as  soon  as  the  coin  was  exhausted  ? 
A  coijintry  has  perchance  four  thousand  millions  of  mechani- 
cal and  manufactured  products,  the  result  of  its  own  industry. 
It  hankers  after  cheapness,  and  opens  its  ports.  It  is  deluged. 
It  gets  products  at  first  more  cheaply.  But  the  industries 
in  which  it  has  an  advantage  furnish  only,  OR  can  be  taken 
only  to  the  extent  of,  one  thousand  millions.  When  its 
treasure  is  gone,  it  must  satisfy  itself  with  one  thousand 
millions.  These  it  may  or  may  not  thereafter  get  cheaply. 
Probably  it  will  get  them  very  dearly  b}^  reason  of  the  low 
price  at  which  it  will  have  to  sell  what  [)rcviously,  wilh  a 
fully  employed  population,  it  could  use  itself.     But  whether 


6  REVIEW   OF  BASTIAT's  SOPHISMS   OP   PROTECTION. 

it  gets  its  small  pittance  cheaply  or  dearly,  it  must  go  without 
the  other  three  thousand  millions.     This  is  what  it  will  get 
for  mistaking  cheapness  for  abundance. 
Bastiat  concludes  as  follows : — 

"  To  restrictive  laws  I  offer  this  dilemma, —  Either  you  allow  that 
you  produce  scarcity,  or  you  do  not  allow  it.  If  you  allow  it,  you 
confess  at  once  tliat  your  end  is  to  injure  the  people  as  much  as 
possible.  If  you  do  not  allow  it,  then  you  deny  your  power  to  dim- 
inish the  supply,  to  raise  the  price,  and  consequently  you  deny  having 
favored  the  producer.  You  are  either  injurious  or  inefficient.  You 
can  never  be  useful." 

M.  Bastiat  evidently  thought  he  had  used  brilliant  logic. 
But  restrictive  laws  have  for  their  object  to  produce  abun- 
dance, and  they  effect  their  object :  if  they  raise  the  price, 
they  increase  in  a  much  greater  degree  the  effective  demand, 
—  the  ability  to  pay  the  price.  The  limitation  of  the  for- 
eign market  makes  it  simply  impossible  to  employ  the  whole 
working  force  of  the  United  States  upon  those  industries 
in  which  it  has  a  decided  advantage.  The  rest  must  be 
employed  upon  fields,  less  advantageous  perhaps,  but  infin- 
itely more  advantageous  than  living  in  the  poorhouse  or 
helping  somebody  do  what  he  can  perfectly  well  do  alone. 

Napoleon  hit  the  mark  when  he  said  that  "  if  an  empire 
were  made  of  adamant,  the  economists  would  grind  it  to 
powder." 

Bastiat  desires  the  consumer  to  have  everything  offered  to 
him  at  a  cheap  rate ;  he  is  entirely  indifferent  about  his 
having  or  not  having  the  means  of  buying.  In  fact,  the 
consumer  of  the  free  trader  was  described  by  Homer,  under 
the  name  of  Tantalus  : — 

"  Then  Tantalus  along  the  Stygian  bounds ; 

Pours  out  deep  groans  ;  with  groans  all  hell  resounds. 
From  circling  floods  in  vain  refreshment  craves, 
And  pines  with  thirst  amidst  a  sea  of  waves  ; 
"When  to  the  water  he  his  lip  applies, 
Back  from  his  lip  the  treacherous  water  flies. 


BEVIEW   OF  BASTIAT's   SOPHISMS   OF   PROTECTION.  7 

Above,  beneath,  around  his  hapless  head, 

Trees  of  all  kinds  delicious  fruitage  spread  ; 

There  figs,  sky-dyed,  a  purple  hue  disclose ; 

Green  looks  the  olive,  the  pomegranate  glows  ; 

There  dangling  pears  exalted  scents  unfold, 

And  yellow  apples  ripen  into  gold. 

The  fruit  he  strives  to  seize ;  but  blasts  arise, 

Toss  it  on  high,  and  whirl  it  to  the  skies." — Pope's  Odyssey. 

For  nineteen  twentieths,  nay  the  whole  of  the  commu- 
nity, production  is  the  condition  precedent  of  consumption. 
That  which  a  nation  can  consume  in  a  year  is  its  annual 
product.  Strike  to  the  earth  a  third  part  of  its  industries,  and 
you  by  the  very  act  strike  off  a  third  of  the  average  indi- 
vidual income.  The  economist  who  is  not  aware  of  these 
things  has  studied  to  little  purpose  either  Adam  Smith  or 
J.  B.  Say :  he  has  gathered  in  their  chaff,  and  left  the  wheat 
untouched.  Abundance  is  impossible  to  the  man  of  the 
empty  purse. 

After  the  Bastiat  fashion,  I  will  offer  a  dilemma  to  the 
free-traders.  Either  they  know  tlie  above,  or  they  do  not 
know  it.  If  they  know  it,  they  must  cease  preaching  free- 
trade  ;  if  they  do  not  know  it,  they  should  come  to  the 
people  of  the  United  States  to  learn,  but  not  to  teach,  politi- 
cal economy. 

Chapter  II.  is  entitled  "  Obstacle  —  Cause." 
In  this  chapter  Bastiat  misses  entirely  the  perception  of 
the  protectionist  doctrine,  which  is  not  that  wants  are  riches, 
or  that  labor  is  riches,  but  that  the  ability  to  satisfy  wants 
is  riches.  The  gross  annual  product  of  the  nation  being  A, 
will  not  be  diminished  by  the  introduction  of  machinery.  It 
will  be  diminished  by  substituting  a  foreign  for  a  domestic 
product,  unless  the  foreign  product  is  so  much  cheaper  as  to 
immensely  increase  consumption  in  spite  of  the  diminished 
means  of  purchase,  and  unless  also  the  relations  of  the  two 
nations  financially  are  such  that  the  imports  will  be  paid 
for  by  exports:  and  even  then  the  new  arrangement  leaves 
the  country  less  independent ;  withdraws  from  it  the  possi- 


8  REVIEW   OF   BASTIAT  S   SOPHISMS    OF   PROTECTION. 

Lility  —  nay,  probability  —  of  afterwards  reducing  the  cost  by 
increased  skill  and  by  invention  ;  lessens  the  diversification 
of  industries  ;  and  takes  from  the  nation  the  incidental  advan- 
tages which  often  spring  from  the  stimulating  effect  of  one 
industry  upon  others.  Who  can  measure  the  effect  in  the 
United  States  of  the  introduction  of  the  cotton  manufacture 
upon  the  other  industries  in  which  machinery  assists  labor  ? 
If  we  had  never  had  the  cotton  manufacture,  it  is  not  likely 
that  even  our  agriculture  would  have  reached  anything  like 
its  present  efficiency ;  and  many  other  arts  would  probably 
not  have  been  acquired  at  all  up  to  the  present  day. 

In  this  chapter  Bastiat  says,  with  italics,  that  "  labor  is 
never  without  einployment.''''  This  is  flying  in  the  face  of  facts 
with  a  vengeance.  What  can  be  the  value  of  the  method  of 
reasoning  which  conducts  a  clever  man  to  such  a  conclusion 
in  spite  of  his  eyes  and  ears? 

Chapter  III.  is  entitled  "  Effort  —  Result." 

In  this  chapter  Bastiat  quotes  a  number  of  French  legis- 
lators ;  and  if  he  quotes  them  correctly,  the  reasons  they 
gave  for  their  votes  or  measures  were  not  very  wise,  and 
furnished  an  opportunity  for  an  easy  victory.  But  it  often 
happens  that  practical  men  are  not  introspective,  not  accus- 
tomed to  put  into  words  the  real  reasons  which  underlie  their 
actions.  When  called  upon  to  do  so,  they  fumble  about  in 
their  minds,  and  end  in  producing,  not  their  real  reason,  but 
some  very  inadequate  substitute  of  it.  A  "  smart "  writer 
like  M.  Bastiat  at  once  falls  upon  their  alleged  reasons, 
demolishes  tl^em,  and  concludes  that  their  authors  were 
fools,  when  very  likely  they  were  in  reality  far  wiser  than 
he  who  felt  himself  entitled  to  sit  in  judgment.  It  may  well 
be,  taking  all  -things  into  consideration,  that  the  opulence  of 
France,  altogether,  is  increased  rather  than  diminished  by 
herself  producing  iron  at  sixteen  francs  which  she  could  buy 
of  England  at  eight :  her  safety  and  independence  are  cer- 
tainly promoted. 

Chapter  IV.  is  entitled  "  Equalizing  of  the  Facilities  of 
Production." 


REVIEW   OF  BASTIAT's   SOPHISMS   OF   PROTECTION.  9 

M.  Bastiat  first  quarrels  with  the  phrase,  which  has  not 
certainly  mathematical  exactitude,  but  which  can  easily 
enough  be  understood  by  any  one  whose  object  is  to  get  at 
ideas,  and  not  to  triumph  over  words.  It  means  that  where 
one  nation  has  an  advantage  over  another  as  to  cheapness  of 
production,  —  such  as  Great  Britain  has  over  the  United 
States  by  reason  of  cheaper  labor,  not  yet  compensated  by 
greater  skill  upon  our  part,  —  she  can  beat  down  and  annihi- 
late our  efforts  to  help  ourselves  and  to  acquire  greater  skill. 
She  has  been  prevented  from  doing  this  by  our  protective 
duties  ;  and  in  many  articles  we  have  already  acquired  a 
skill  sufficient  to  give  us  here  at  home  the  articles,  even  at  a 
cheaper  monied  price  than  we  could  import  them.  In  some 
we  have  not  succeeded  as  yet  so  well ;  and  in  some  we  prob- 
ably never  shall,  so  long  as  we  strive  to  keep  up  among  us 
that  higher  rate  of  real  wages  which  is  our  chief  hope  for  the 
future.  But  the  higher  price  will  be  much  more  than  com- 
pensated to  the  nation  by  the  double  production  provoked  by 
a  home  exchange,  as  against  the  single  production  provoked 
by  a  foreign  exchange  ;  as  also  by  our  greater  security  botii 
in  peace  and  in  war,  and  also  by  the  incidental  stimulus 
which  one  industry  gives  to  others. 

Bastiat  says  that  in  this  case,  as  in  all,  "  the  protectionists 
favor  the  producer,  while  the  poor  consumer  seems  entirely  to 
have  escaped  their  attention."  He  seems  to  forget  that  nearly 
all  of  the  p)oor  consumers  are  consumers  only  in  consequence 
of  their  being  able  to  produce  ;  and  that  those  few  who  do 
not  produce  themselves  are  dependent  upon  the  profits  of 
productive  instruments,  which  would  cease  to  yield  a  profit 
if  the  producing  consumers  could  not  produce,  and  therefore 
could  not  consume.  If  the  consumers'  means  of  buying 
were  rained  down  miraculously  from  the  sk}',  tlie  Bastiat 
philosophy  might  be  excellent ;  but  as  long  as  their  means  of 
buying  are  entirely  dependent  upon  their  first  producing,  it 
would  seem  that  the  individual  should  be  considered  in  both 
relations. 

Bastiat  contends,  first,  that  equalizing  the  facilities  of  pro- 
duction is  to  attack  the  foundations  of  all  trade. 


10  REVIEW   OP  BASTIAT'S   SOPHISMS   OF  PROTECTION. 

To  attempt  to  equalize  all  facilities — say,  rather,  to  counter 
balance  all  advantages — might  be  open  to  his  objection.  But 
the  American  protectionist,  for  whose  conversion  the  volume 
under  review  was  published,  does  not  propose  to  compensate 
great  differences  growing  out  of  soil  and  climate.  He  does 
not  propose  to  grow  pineapples  under  glass  at  ten  times  the 
cost  of  importation,  nor  to  do  any  other  of  the  like  absurdities 
imagined  by  Bastiat.  What  he  does  propose  is,  to  balance 
the  altogether  artificial  advantages  arising  out  of  accidental 
superiority  in  skill  until  we  can  ourselves  acquire  the  like 
skill  ;  to  balance  the  difference  arising  out  of  our  dearer 
labor  and  capital ;  and  to  protect  our  industries  from  the 
mischievous  attacks  in  which  products  are  sold  under  cost 
for  the  very  object  of  destroying  competitors.  We  have  fuU 
faith  that  the  competition  of  fifty  millions  of  people  will  suf- 
fice to  bring  as  low  prices  and  as  much  skill  as  are  possible 
under  the  circumstances  ;  and  that  the  result  will  be  that  we 
shall  produce  everything  which  our  climate  and  soil  permit 
at  considerably  less  sacrifice  of  labor  and  abstinence  than 
the  same  things  cost  when  brought  from  abroad. 

M.  Bastiat  says,  second,  that  it  is  not  true  that  the  labor 
of  one  country  can  be  crushed  by  the  competition  of  more 
favored  climates. 

But  it  is  quite  true  that  domestic  arts  and  manufactures, 
which  are  most  important  to  possess,  can  be  crushed  by  the 
competition  of  countries  having  cheaper  labor  and  equal  or 
greater  skill.  If  he  meant  his  No.  2  to  assert  or  insinuate 
the  contrary,  the  hardihood  of  the  assertion  or  insinuation 
would  hardly  require  an  answer.  Deductive  reasoning  shows 
that  it  can,  and  history  shows  that  it  does. 

He  says,  third,  that  protective  duties  cannot  equalize  the 
facilities  of  production  ;  fourth,  that  freedom  of  trade  equal- 
izes these  conditions  as  miich  as  possible  ;  and,  fifth,  that 
the  countries  which  are  the  least  favored  by  nature  are  those 
which  profit  most  by  freedom  of  trade. 

In  all  this  he  chooses  to  misunderstand  what  is  meant  by 
equalizing  the  facilities  of  production.  This  is  simple  trifling. 
Next  he  exemplifies  his  position  by  supposing  a  case  of  Pari- 


EEVIEW  OP  BASTIAT'S  SOPHISMS   OF   PROTECTION.  11 

sian  speculators  producing  oranges  at  ten  times  the  cost  of 
importing  them  from  Portugal,  and  being  protected  by  a  duty 
of  nine  hundred  per  cent.  This  is  also  trifling :  it  has  noth- 
ing to  do  whatever  with  any  actual  question  as  to  protection. 
Then  follow  several  excellent  paragraphs,  showing  how  any 
improvement  in  production  spreads  itself  to  the  advantage  of 
the  whole  community,  and  showing  how  natural  advantages, 
and  also,  finally,  the  advantages  arising  from  inventions,  come 
to  be  enjoyed  by  consumers  gratis,  they  paying  only  the 
necessary  wages  of  labor  and  abstinence.  But  after  all  those 
excellent  and  really  eloquent  paragraphs  comes  this :  — 

"  Hence  we  see  the  enormous  absurdity  of  the  consuming  country, 
which  rejects  produce  precisely  because  it  is  cheap.  It  is  as  though 
we  should  say,  '  We  will  have  nothing  of  that  which  Nature  gives  you. 
You  ask  of  us  an  effort  equal  to  two,  in  order  to  furnish  ourselves  with 
articles  only  attainable  at  home  by  an  effort  equal  to  four.  You  can 
do  it  because  with  you  Nature  does  half  the  work.  But  we  will  have 
nothing  to  do  with  it ;  we  will  wait  till  your  climate,  becoming  more 
•inclement,  forces  you  to  ask  of  us  a  labor  equal  to  four,  and  then  we 
can  treat  with  you  upon  an  equal  footing.'  " 

This  is  one  of  Bastiat's  extreme  cases,  but  under  certain 
circumstances  it  would  not  be  altogether  so  absurd  as  he  ap- 
pears to  imagine,  e.  g. :  — 

The  products  in  which  the  United  States  have  an  advantage 
are  agricultural.  They  can  produce  enough  for  themselves 
and  as  much  more.  Call  the  possible  product  2  A.  Suppose 
that  what  they  cannot  produce  except  at  a  double  effort  are 
mechanical  and  manufactured  products.  Call  these  M.  There 
is  a  foreign  demand  for  |  A.  Under  free  trade  there  can  be 
produced  and  imported  1|-  A;  M  imported  being  equal  to 
^  A;  and  the  country  will  have  for  consumption  A -f- ^i- 
Now  remove  one  half  of  the  population  from  agriculture  to 
the  mechanical  and  manufacturing  arts.  The  half  who  are 
left  can  still  produce  1  A,  or  enough  agricultural  products 
for  the  whole  population ;  and  the  other  half  can  produce  ]M 
by  a  double  effort.  There  will  then  be  for  consumption 
A  -f-  M,  notwithstanding  the  double  effort.      But  suppose 


12  REVIEW   OF   BASTIAT'S  SOPHISMS   OF  PROTECTION. 

the  required  effort  not  double,  but  1^.  The  product  will 
then  be  A  +  I  M.  The  whole  population,  both  agricultural 
and  mechanical  and  manufacturing,  will  then  have  one  third 
more  of  M  under  protection  than  under  free  trade,  even  if  the 
effort  necessary  be  50  per  cent  greater  to  produce  M.  If  the 
effort  (measured  by  labor  and  abstinence)  be  the  same,  then 
the  product  under  protection  will  be  A  -|-  2  M. 

The  mechanical  and  manufacturing  arts  then  which  are 
introduced  under  a  duty  of  50  per  cent  in  such  circum- 
stances, will  at  once  give  the  whole  country  one  third  more  of 
their  products  than  can  be  had  under  free  trade  ;  and,  as  skill 
increases,  they  will  give  more  and  more  ;  and  their  skill  will 
react  upon  agriculture,  rendering  its  processes  more  effectual, 
and  enabling  a  still  greater  withdrawal  of  men  from  agricul- 
ture to  the  arts.  And  the  home  market  will  be  always  safe 
against  war  and  against  excessive  foreign  crops;  and,  more- 
over, it  will  grow  step  by  step  with  the  population,  which  the 
foreign  market  never  can. 

M.  Bastiat  makes  a  great  friend  of  Nature  :  but  it  is  not 
against  Nature  that  the  American  protectionist  raises  his  bul- 
warks. He  imports  many  tropical  products  free  of  duty,  but 
he  intrenches  against  the  foreign  skill  which  is  not  natural 
but  purely  artificial,  and  which  is  speedily  overtaken  by  our 
own ;  and  he  intrenches  against  the  lower  wages  current 
abroad,  which  we  do  not  wish  to  imitate  here.  In  spite  of  a 
50  per  cent  duty,  the  whole  country  is  richer  immediately,  and 
gains  more  and  more  as  skill  is  acquired. 

M.  Bastiat  says  that  we  call  the  free  traders  theorists,  and 
he  retorts  the  accusation  ;  but  he  mistakes  us.  We  do  not 
complain  of  them  for  being  theorists,  but  for  being  bad  the- 
orists, blundering  theorists,  theorists  who  use  arguments  in 
every  case  wdiich  are  only  applicable  in  one  of  all  possible 
cases,  to  wit,  in  the  case  where  the  whole  population  can  be 
fully  occupied  in  those  industries  in  which  it  has  an  advan- 
tage, and  where,  also,  their  whole  surplus  can  find  steady, 
sure,  uninterrupted  markets.  In  this  very  exceptional  case, 
to  buy  in  the  cheapest  market  is  best  in  a  purely  financial 
aspect.     Their  proposition  is  not  universal,  not  one  of  even 


REVIEW   OF   BASTIAT's   SOPHISMS   OF   PROTECTION.  13 

frequent  application.  To  argue  from  it  as  if  it  were  a  uni- 
versal proposition,  as  the  free  traders  do,  is  to  violate  one  of 
the  fundamental  maxims  of  logic. 

Chapter  V,  —  "  Our  Productions  are  overloaded  with 
Taxes." 

Here  is  more  bad  theory.  We  are  taxed  heavily,  he  says. 
How  absurd,  then,  to  add  another  tax  which  makes  France 
pay  twelve  francs  for  iron  which  it  can  get  from  England  for 
eight.  The  blunder  here  consists  in  not  perceiving  that, 
although  the  extra  price  of  iron  may  in  a  certain  sense  be 
called  a  tax,  yet  it  is  of  an  entirely  different  nature  from  the 
other  things  called  by  the  same  name.  Suppose,  for  instance, 
that  France  is  using  2,000,000  of  tons  of  iron  produced  in 
France  and  costing  twelve  dollars  a  ton.  Here  are  824,000,000 
of  products  which  are  paid  for  by  other  824,000,000  of  various 
French  products.  The  result  is  commodities  worth  848,000,000, 
every  dollar  of  which  is  net  individual  income  to  some  French 
citizen,  as  has  been  well  shown  by  J.  B.  Say.  The  totality 
of  French  industries  is  in  equilibrium.  Each  employs  all  the 
capital  and  all  the  industry  it  can,  and  carries  along  its  nor- 
mal surplus  stock.  The  expansion  of  each  industry,  both  as 
to  capital  and  quantity  of  labor  employed,  is  limited  by  the 
extent  of  the  market.  Now  open  the  ports  and  bring  in  the 
2,000,000  tons  of  English  iron  at  eight  dollars.  The  imme- 
diate effect  upon  the  consumers  of  iron  is  that  ih.ej  save 
88,000,000 :  but  the  general  demand  for  French  products  is 
diminished  832,000,000.  The  importation  of  iron  selling  for 
816,000,000  provokes  a  French  production  of  816,000,000. 
The  home  production  of  the  iron,  on  the  contrary,  gave  a  total 
home  product  of  848,000,000,  —  a  difference  of  832,000,000. 
It  is  true  that  the  community  saves  88,000,000  in  the  price  of 
the  iron,  but  on  the  other  hand  its  aggregate  ability  to  con- 
sume is  reduced  832,000,000;  and  under  these  circumstances 
it  may  well  happen  that  its  ability  to  consume  imported  iron 
at  eight  dollars  will  be  less  than  its  ability  to  consume  home- 
made iron  at  twelve  dollars.  The  free-traders  call  the  sums 
collected  to  pay  the  interest  on  the  national  debt  and  the  ex- 


14  REVIEW   OF  BASTIAT's   SOPHISMS   OF  PROTECTION. 

penses  of  government  taxes,  and  they  call  the  extra  price 
(when  there  is  an  extra  price)  paid  for  home-made  products 
also  taxes.  But  they  are  entirely  different;  almost  as  different 
as  the  files  of  a  carpenter  and  the  files  of  a  regiment.  The  tax 
arising  out  of  protective  laws,  in  the  instance  under  examina- 
tion, takes  from  the  French  consumers  four  dollars  a  ton  ; 
but  it  gives  them  twelve  :  the  net  result  is  that  they  are 
better  off  by  eight,  or  twice  the  amount  of  the  so-called  tax. 
This  flows  inevitably  from  Say's  proposition  that  the  whole 
price  of  everything  produced  in  a  country  is  net  individual 
income  to  some  citizen  of  that  country.  If  the  free-traders 
would  make  the  other  "  taxes  "  produce  a  similar  result,  we 
would  all  clamor  for  more  taxes. 

Chapter  VI.  is  called  "Balance  of  Trade."  He  begins  as 
follows :  — 

"  Our  adversaries  have  adopted  a  system  of  tactics  which  embar- 
rasses us  not  a  little.  Do  we  prove  our  doctrine  ?  They  admit  the 
tcuth  of  it  in  the  most  respectful  manner.  Do  we  attack  their  princi- 
ples? They  abandon  them  with  the  best  possible  grace.  They  only 
ask  that  our  doctrine,  which  they  acknowledge  to  be  true,  should  be 
confined  to  books ;  and  that  their  principles,  which  they  allow  to  be 
false,  should  be  established  in  practice.  If  we  will  give  up  to  them 
the  regulation  of  our  tariffs,  they  will  leave  us  triumphant  in  the  do- 
main of  theory." 

I\I.  Bastiat  was  in  error  as  to  the  attitude  of  protectionists 
generally.  They  do  not  admit  that  the  theory  of  the  free- 
traders is  correct,  nor  their  own  practice  wrong  ;  but  when 
worried  by  much  beating  of  gongs — represented  to  be  logical 
instruments  —  and  by  much  assumption  of  superiority  in 
reasoning,  they  have  often  been  inclined  "to  reply  :  "  You 
puzzle  us  with  sophistical  riddles.  We  feel  them  to  be 
wrong,  but  have  not  the  time,  perhaps  not  the  ability,  to 
show  wherein  they  are  wrong.  We  have  seen  your  own 
chiefs  perplexed  with  the  fallacy  of  Achilles  and  the  tortoise, 
and  some  of  them  declaring  it  to  be  insoluble,  —  that  being  an 
argument  known  to  be  erroneous,  but  one  of  which  no  one 


REVIEW   OF   BASTIAT's   SOPHISMS   OP   PROTECTION.  15 

has  ever  yet  given  a  wholly  satisfactory  explanation.  Now, 
we  feel  that  your  arguments  are  sophistical ;  we  are  so  sure 
of  it  that  we  are  ready  to  risk  our  fortunes  upon  the  belief. 
We  are  not  able  to  talk  you  down,  and  are  willing  you  should 
theorize  to  your  hearts'  content,  so  long  as  you  will  confine 
yourselves  to  theory."  Such  is  the  feeling  of  many.  It  is 
not  the  feeling  of  the  writer.  It  is  as  absurd  as  anything 
well  can  be  to  say,  "  So  and  so  may  be  very  wellin  theory, 
but  it  will  not  do  in  practice."  If  it  will  not  do  in  practice, 
it  most  assuredly  is  not  good  in  theory.  It  may  be  good  in 
pseudo-theory ;  but  true  theory  must  explain  practice,  or  be 
in  accord  with  it.  Sound  theory  and  sound  practice  are 
Siamese  twins.  As  was  said  before,  we  do  not,  as  you  have 
the  presumption  to  say,  object  to  you  as  theorists :  we  only 
object  to  you  as  bad  theorists. 

M.  Bastiat  gives  us  examples  in  which  every  merchant  will 
find  errors  ;  upon  which,  however,  it  is  not  worth  while  to 
expend  time,  and  patience,  —  the  main  object  of  the  chap- 
ter being  to  show,  what  everybody  knew  before,  namely, 
that  an  unusually  successful  voyage  brings  into  a  country  a 
much  larger  value  than  it  takes  out.  But  there  are  also  very 
unsuccessful  voyages,  which  bring  in  much  less  than  they 
take  out ;  and  everybody  who  knows  anything  of  commerce 
is  aware  that  the  average  result  is  cost,  expenses,  —  and  a 
profit  not  greater  than  what  is  usual  in  other  kinds  of  busi- 
liess.  This  is  fact ;  and  this  also  is  the  result  which  the 
reasoning  of  all  respectable  economists,  from  Adam  Smith 
down,  points  out  as  what  must  necessarily  be  fact.  The 
balance  of  trade  in  our  days  is  so  complicated  by  the  transfer 
of  securities,  and  by  the  remittances  of  the  profits  upon 
foreign  investments,  that  no  certain  conclusion  can  be  drawn 
from  custom-house  statistics ;  but  for  all  that,  an  exportation 
of  treasure,  exceeding  greatly  the  product  of  the  country, 
indicates  an  adverse  balance  of  trade,  which  cannot  exist 
many  years  without  financial  convulsion. 

Chapter  VII.  is  entitled  "  Petition  from  the  Manufacturers 
of    Candles,    Wax-lights,    Lamps,    Chandeliers,    Reflectors, 


16  REVIEW    OP   BASTIAT's   SOPHISMS   OF   PROTECTION. 

Snuffers,  Extinguishers ;  and  from  the  Producers  of  Tallow, 
Oil,  Resin,  Alcohol,  and  generally  of  Everything  used  for 
Lights." 

This  is  a  petition  against  sunshine,  and  regarded  as  per- 
siflage, it  is  excellent.  Considered  as  an  economical  argu- 
ment, it  can  impose  upon  no  one  who  has  the  least  com- 
mon-sense, or  the  least  logic,  which  is  only  common  sense 
put  into  a  formula.  As  the  sun  does  not  give  us  light, 
through  the  twenty-four  hours,  artificial  light  must  be  had 
and  can  be  had  only  through  labor.  If  the  circumstances 
are  such  that  by  procuring  it  from  abroad  the  gross  annual 
product  is  greater  than  it  is  by  producing  it  at  home,  then, 
financially  considered,  it  is  better  to  procure  it  from  abroad. 
But  this  case  seldom  occurs,  as  has  already  been  sufficiently 
shown. 

Chapter  VIII.  is  entitled  "  Discriminating  Duties." 
This  is  a  particular  case,  made  up  with  just  such  circum- 
stances as  might  lead  a  poor  wine-grower  to  draw  from  it 
illegitimately  an  universal  conclusion.  As  rhetoric,  intended 
to  deceive,  it  is  ver}'^  good.  It  is  entirely  unworthy  of  one 
who  is  seriously  investigating  national  interests. 

Chapter  IX.  is  entitled  "  Wonderful  Discovery." 
In  this,  M.  Bastiat  discovers  that  a  railroad  has  been  made 
between  Paris  and  Brussels  in  order  to  obviate  or  overcome 
natural  obstacles  to  trade,  but  that  the  duty  on  goods  be- 
tween the  two  places  was  an  artificial  obstacle,  and  conse- 
quently absurd.  The  answer  is,  that  the  railroad  was  built 
with  the  intention  of  removing  obstacles  from  desirable  and 
beneficent  communication.  It  was  not  built  to  facilitate  the 
passage  of  foreign  soldiers  to  Paris,  nor  to  facilitate  the 
invasion  of  the  markets  of  France  by  produce  that  is  not 
desirable.  Whether  the  introduction  of  the  produce  be 
desirable  or  not,  must  be  determined  b}''  other  reasons  than 
the  fact  that  a  railroad  exists  by  which  it  can  be  conveyed. 
Distance  is  an  obstacle  to  every  sort  of  communication. 
That  we  take  measures  to  overcome  the  obstacle  does  not 


BEVIEW  OP  BASTIAT's   SOPHISMS   OP   PROTECTION.  17 

prove  that  every  sort  of  communication  is  productive  of 
opulence. 

M.  Bastiat  says :  — 

"  Frankly,  is  it  not  humiliating  to  the  nineteenth  century  that  it 
should  be  destined  to  transmit  to  future  ages  the  example  of  such 
puerilities  seriously  and  gravely  practised  ?  " 

We  reply,  Frankly,  it  will  he  humiliating  to  the  nineteenth 
century  to  have  to  transmit  to  future  ages  Bastiat's  puerilities 
in  reasoning  as  examples  of  what  could  be  thought  worthy  of 
being  presented  to  France,  England,  and  the  United  States 
by  a  person  claiming  to  be,  and  by  many  even  highly  edu- 
cated persons  held  out  to  be,  an  eminent  logician. 

Chapter  X.,  entitled  "  Reciprocity,"  is  in  the  same  vein. 
A  swamp,  a  bog,  a  rut,  a  steep  hill,  stormy  oceans,  etc.  are 
veritable  protective  tariffs.  By  the  railroad,  the  steamship, 
etc.  we  do  all  we  can  to  remove  the  other  obstacles  ;  but  the 
artificial  obstacle,  which  it  will  cost  nothing  to  remove,  we 
suffer  to  remain.  Why  do  we  suffer  it  to  remain  ?  Because 
we  believe  that  this  particular  obstacle  to  intercourse  is  not 
an  obstacle,  but  an  aid,  to  acquiring  opulence.  Whether  it 
is  or  is  not  so  cannot  be  determined  by  giving  it  the  same 
name,  putting  it  in  the  same  class,  with  other  things  which 
we  recognize  as  pernicious.  If  there  were  a  tunnel  formed 
between  England  and  France,  it  would  not  be  absurd  to  take 
such  measures  as  would  prevent  its  being  used  for  the  pas- 
sage of  hostile  forces.  When  we  build  railroads  and  steam- 
ships, we  do  not  logically  bind  ourselves  to  allow  them  to  be 
used  for  every  conceivable  purpose,  whether  useful  or  per- 
nicious ;  and  the  fact  that  the  railroad  or  the  steamship  may 
be  made  to  subserve  a  certain  purpose,  affords  no  ground  for 
inferring  that  such  purpose  is  or  is  not  desirable.  This  must 
be  ascertained  by  quite  another  sort  of  logic.  Opium  and 
rum,  the  smallpox  and  the  yellow  fever,  are  not  necessarily 
beneficial  because  distributed  by  steamships  and  railroads. 

Chapter  XI.  is  entitled  "  Absolute  Prices."     lie  says  :  — 

3 


18  REVIEW   OP  BASTIAT's   SOPHISMS   OF   PROTECTION. 

"  If  we  wish  to  judge  between  freedom  of  trade  and  protection,  to 
calculate  the  probable  effect  of  any  political  phenomenon,  we  should 
notice  how  far  its  influence  tends  to  the  production  of  abundance  or 
scarcity.  We  must  beware  of  trusting  to  absolute  prices ;  it  would 
lead  to  inextricable  confusion." 

-He  assumes  throughout  the  chapter  that  protection  pro- 
duces scarcity,  and  free-trade  abundance.  Cases  might  exist 
where  it  would  do  so.  Generally  it  does  the  reverse,  and  it 
is  notably  so  in  the  United  States.  Why  is  this  ?  Because, 
when  the  population  is  fully  occupied,  much  is  produced  ; 
there  is  much  to  divide.  When  a  considerable  proportion  is 
unoccupied,  little  comparatively  is  produced ;  there  is  less  to- 
divide.  We  saw  the  latter  from  1873  to  1879  :  wages  and 
profits  were  both  low.  We  see  the  former  now  in  1881 : 
the  people  are  more  fully  occupied,  and  both  wages  and 
profits  are  higher.  But  the  tariff  also  is  higher.  The 
difference  has  arisen  from  the  abandonment  in  1873  of  the 
active  formation  of  instruments,  and  from  the  resumption  of 
the  movement  in  1880.  But  the  larger  production  is  con- 
comitant with  high  prices,  and  the  smaller  production  was 
concomitant  with  low  prices.  Cheapness,  then,  may  exist 
without  abundance,  and  abundance  may  exist  without  cheap- 
ness, however  much  this  may  astonish  the  free-trader. 

Chapter  XII.  is  entitled,  "  Does  Protection  raise  the  Rate 
of  Wages  ?  " 

M.  Bastiat  says  to  the  working-man:  — 

"  But  justice,  s,imY)\Q  justice,  —  nobody  thinks  of  rendering  you  this. 
For  would  it  not  be  just  that  after  a  long  day's  labor,  when  you  have 
received  your  little  wages,  you  should  be  permitted  to  exchange  them 
for  the  largest  possible  sum  of  comforts  that  you  can  obtain  voluntarily 
from  any  man  whatsoever  upon  the  face  of  the  earth.?" 

M,  Bastiat  put  himself  forward  as  a  logician,  and  also  as  a 
sincere  expositor  of  truth.  He  desired  and  intended,  so  he 
implied,  to  teach  the  truth,  the  whole  truths  and  nothing  but 
the  truth  ;  and  yet  we  here  have  him  commencing  his  argu- 
ment from  the  middle  of  the  economical  fact  he  was  examin- 


EEVIEW   OF   BASTIAT'S   SOPHISMS   OF  PROTECTION.  19 

ing.  He  commences  with  the  poor  laborer  when  he  has  got 
his  little  wages :  then,  truly,  it  would  be  well  for  him  to  get 
as  much  in  exchange  for  them  as  possible.  But  M.  Bastiat 
carefully  keeps  out  of  sight  that  it  is  the  protective  policy 
which  has  given  the  man  his  employment,  and  consequently 
his  wages.  M.  Bastiat  may  have  believed  that  the  man 
would  get  as  good  or  better  employment  under  a  regime  of 
free-trade  ;  but  if  so,  that  was  the  point  at  issue.  To  assume 
it  would  seem  to  show  M.  Bastiat  to  have  been  more  anxious 
to  gain  his  point  than  to  ascertain  the  truth. 
M.  Bastiat  continues : — 

"  Is  it  true  that  protection,  which  avowedly  raises  prices,  and  thus 
injures  you,  raises  proportionately  the  rate  of  wages?" 

Here  is  the  same  rhetorical  trick  repeated.  It  is  assumed 
that  the  man  will  get  work  under  free  trade  the  same  as 
under  a  protective  policy.  To  assume  this  is  to  take  the 
whole  free-trade  theory  for  granted,  without  any  proof  or 
argument.  M.  Bastiat,  however,  to  give  everyone  his  due, 
seems  really  to  believe  he  is  right ;  and  he  sometimes  does 
argue  the  question  effectively  from  the  premises  which  he 
assumes.  These,  however  (unfortunately  for  free-trade  phil- 
osophy), are  simple  blunders.  They  are  venerable  blunders, 
it  is  true,  as  they  can  claim  the  respectable  paternity  of 
Adam  Smith  more  than  a  hundred  years  ago  ;  but  they  are 
very  evident  blunders  for  all  that.  We  may  borrow  here 
Quinctilian's  charitable  remark  about  Homer,  and  say,  "  Some- 
times the  good  Adam  Smith  nods."  Unfortunately,  he  nod- 
ded at  a  very  important  point ;  and  he  did  the  sleeping  scene 
so  naturally  and  effectively  in  his  pages  that  every  free- 
trade  economist  for  a  century  and  over  has  fallen  into  a 
slumber  just  where  he  did. 

Bastiat  says  : — 

"  The  rate  of  wages  depends  upon  the  proportion  which  tlie  supply 
of  labor  bears  to  the  demand." 

Very  true.     He  continues  thus : — 


20  REVIEW   OF   BASTIAT'S   SOPHISMS  OP   PROTECTION. 

"  On  what  depends  the  demand  for  labor  ?  On  the  quantity  of  dis- 
posable national  capital.  And  the  law  which  says  '  Such  or  such  an 
article  shall  be  limited  to  home  production,  and  no  longer  imported 
from  foreign  countries,'  can  it  in  any  way  increase  that  capital  ?  Not 
in  the  least.  The  law  may  withdraw  it  from  one  course,  and  transfer 
it  to  another ;  but  cannot  increase  it  one  penny.  Then  it  cannot  in- 
crease the  demand  for  labor," 

This  is  the  fundamental  position  of  the  free  traders.  It  was 
taken  by  Adam  Smith  more  than  a  hundred  years  ago,  was 
repeated  by  Mr.  John  Stuart  Mill  some  thirty  years  ago, 
again  repeated  by  M.  Bastiat,  and  is  now  presented  to  the 
American  people  by  the  Free  Trade  League  of  New  York 
in  the  translation  of  M.  Bastiat's  "  Sophisms  of  Protection  " 
now  under  review.  If  this  position  can  be  maintained,  the 
free-trade  doctrine  stands.  If  it  cannot  be  maintained,  the 
free-trade  doctrine  falls.  It  has  been  already  examined  as 
presented  by  Adam  Smith,  and  again  examined  as  presented 
by  Mr.  Mill.  Let  us  now  examine  it  as  put  forward  by  M. 
Bastiat.  He,  of  course,  uses  the  word  "  capital "  in  the 
French  sense,  as  signifying  everything  which  can  be  used  to 
assist  or  support  labor ;  and  his  proposition  is  therefore 
somewhat  broader  than  that  of  the  English  authors,  who 
limited  the  words  to  the  funds  set  apart  for  the  support  of 
productive  labor. 

To  get  at  the  bottom  of  this  question,  we  must  see  what 
is  the  normal  condition  of  an  industrial  community.  Evid- 
ently it  must  be  possessed  of  certain  industries.  A,  B,  C,* 
D,  etc.  Let  us  examine  industry  A.  It  was  commenced  for 
the  sake  of  profit.  The  same  motive  led  to  its  increase  con- 
tinually, so  long  as  the  satisfactory  profit  was  attainable  ; 
but,  finally,  it  over-ran  the  market,  as  was  evidenced  by 
a  portion  of  its  products  remaining  unsold  (or  a  portion  of 
its  materials  remaining  unconverted  into  finished  products) 
by  reason  of  a  lack  of  demand.  The  producers  then  find  a 
portion  of  their  capital  locked  up,  either  in  finished  products 
or  in  unconverted  material,  or  in  both,  and  are  compelled  to 
cease  augmenting  their  production.  Some  stock  they  find  it, 
upon  the  whole,  convenient  to  carry  rather  than  be  uupre- 


REVIEW   OF  BASTIAT'S   SOPHISMS   OF  PROTECTION.  21 

pared  for  fluctuations  in  the  demand  ;  and  they  naturally 
carry  as  large  a  stock  as  they  can  without  reducing  profits 
below  the  point  which  satisfies  the  existing  "  effective  de- 
mand for  accumulation."  Industry  A,  then,  normally  car- 
ries on  a  certain  stock  of  products,  and  this  stock  locks  up  a 
portion  of  the  capital  employed  in  the  industry.  This  stock 
is  unemployed  capital,  and  is  recognized  as  such  by  Mr.  John 
Stuart  Mill,  who,  however,  failed  to  observe  the  significance 
of  the  fact,  or  its  important  bearing  upon  economical  reason- 
ing. What  is  true  of  industry  A  is  true  of  B,  C,  D,  and 
all  the  others  acquired  by  the  community,  which  thus  is  seen 
to  contain  a  multitude  of  industries,  whose  aggregate  stocks 
of  finished  products  and  materials  compose  the  aggregate 
unemployed  capital  of  the  community.  It  is  the  function  of 
this  unemployed  capital  to  regulate  the  movement  of  in- 
dustry. When  the  stocks  increase,  they  enforce  a  slower 
movement ;  when  they  are  diminished,  prices  rise,  and  the 
industrial  movement  is  stimulated  to  greater  activity.  We 
come,  then,  inevitably  to  the  conclusion  that  in  an  industrial 
community  the  increase  of  industry  is  not  limited  by  capital, 
but  that  the  increase  of  both  industry  and  capital  is  limited 
by  the  "  field  of  emploj^ment." 

But  what  limits  the  field  of  employment?  Evidently,  the 
limits  which  exist  to  effective  demand.  Let  us  confine  our 
attention  to  a  single  industry,  say  the  shoe  manufacture. 
The  desire  of  men  for  shoes  is  in  itself  limited.  If  they 
could  be  had  without  effort  or  sacrifice,  a  certain  number  of 
human  beings  would  use  only  a  certain  number  of  shoes. 
Interpose  a  difficulty  of  attainment,  the  necessity  for  effort 
or  sacrifice,  and  less  will  be  used.  There  is,  then,  a  limit  to 
the  shoe  manufacture,  even  in  a  community  where  every 
person  could  find  a  sale  for  his  labor  if  he  desired  to  find 
one  ;  and  the  field  is  narrowed  still  further  if  a  i)ortion  of 
the  community  is  not  able  to  find  employment.  Evidently, 
only  a  certain  number  of  shoes  can  be  profitably  made  at 
any  cost  you  choose  to  fix  upon.  Reduce  profits  ever  so 
low,  and  still  the  manufacture  has  its  limits.  Increase  now 
the  aggregate  means  of  the  community  fur  the  purchase  of 


22  REVIEW   OF   BASTIAT's   SOPHISMS    OF   PROTECTION. 

shoes,  whether  by  increasing  the  population  or  hy  increasing 
the  proportion  of  the  population  which  can  find  a  sale  for  its 
labor,  and  the  demand  for  shoes  will  increase,  their  exchange- 
able value  will  rise,  the  profits  of  the  manufacture  will 
augment,  and  it  will  be  enlarged  to  meet  the  changed  con- 
ditions. It  will  find  its  new  limits  in  the  production  which 
again  reduces  the  exchangeable  value  of  shoes  to  that  point 
where  the  profits  fall  to  the  rate  usual  in  the  community. 
The  moment  profits  are  such  as  to  enable  the  manufacturers 
to  save,  and  add  to  their  capital  an  annual  percentage, 
greater  than  that  by  which  the  population  increases,  they 
will  increase  their  production  faster  than  the  population 
increases  ;  when  profits  are  less,  they  will  allow  the  popu- 
lation to  gain  upon  the  production.  There  is,  evidently,  a 
limit  to  the  field  of  employment  open  to  this  industry.  It 
will  be  wider  under  certain  circumstances,  narrower  under 
others.  But  it  is  this  limit, —  the  limit  of  the  field  of  employ- 
ment,—  which  regulates  both  the  quantity  of  labor  and  the 
quantity  of  capital  which  will  be  employed  in  it.  But  what  is 
true  of  shoes  is  true  of  every  other  commodity,  and  of  every 
service  known  to  the  community.  It  would  seem,  then,  that 
the  normal  condition  of  an  improving  community  was  this. 
Skill,  dexterity,  judgment,  machinery  are  constantly  dimin- 
ishing the  sacrifice  at  which  men  can  procure  the  commodities 
produced  by  its  industries ;  but  they  are  also  constantly  in- 
creasing the  mass  of  unemployed  capital,  and  forcing  it  to 
search  for  new  commodities  and  new  services,  which  may 
tempt  the  capitalists,  great  and  small,  to  increase  their  con- 
sumption, so  as  to  keep  pace  with  the  increasing  capacity  for 
production.  Each  new  commodity,  convenience,  and  amuse- 
ment furnishes  a  new  market  for  the  existing  industries,  and 
enlarges  the  effective  demand.  The  field  of  employment  is 
increased,  the  people  are  more  fully  occupied,  the  gross 
annual  product  is  augmented,  and  the  purposes  to  which  an 
additional  fixed  and  floating  capital  can  be  applied  are  mul- 
tiplied. This  is  a  society  in  which  the  introduction  of  a  new 
industry  finds  ample  unemployed  capital  for  its  development, 
and  in  which  its  products  immediately  enlarge  the  market 


REVIEW   OF  BxiSTIAT'S   SOPHISMS   OF   PROTECTION.  23 

for  the  products  of  the  old  industries,  and  enable  them  to 
increase  their  production  and  the  capital  employed  by  them. 

The  normal  condition  of  the  society  imagined  by  Adam 
Smith,  and  by  John  Stuart  Mill  in  his  first  volume,  and  by 
Bastiat,  is  one  where  the  field  of  employment  is  checked  by 
the  want  of  capital.  Deductive  reasoning  leads  us  to  the 
conviction  that  they  put  the  cart  before  the  horse  ;  to  the 
conviction  that,  on  the  contrary,  it  is  capital  which  is  limited 
by  the  limitation  of  the  field  of  employment.  Introduce  the 
new  industry,  and  the  capital  necessary  for  its  development 
will  be  found  waiting  for  the  work,  and  will  be  rapidly  repro- 
duced and  more  than  reproduced  by  the  augmented  activity 
of  the  previously  acquired  industries.  There  will  be  a  de- 
mand for  more  labor,  and  the  increased  annual  product  will 
reward  the  labor  with  higher  wages. 

Pure  reasoning  would  have  led  to  the  conclusion  that  in  a 
community  possessed  of  a  considerable  variety  of  industries 
there  must  be  an  enormous  aggregate  of  commodities  unsold 
or  unconverted,  or,  in  other  words,  of  unemplo3'ed  capital ; 
and  an  inquiry  in  Wall  Street  or  State  Street  would  have  re- 
vealed that  such  was  the  fact.  The  free  traders  missed  the 
fact,  because  they  did  not  stop  to  reason,  but  preferred  to 
jump  at  conclusions. 

M.  Bastiat's  assertion,  then,  that  a  protective-  law,  which 
says  such  or  such  an  article  shall  be  limited  to  home  produc- 
tion, cannot  increase  disposable  capital  a  single  penny  is  simply 
a  blunder.  It  can  increase  it  in  the  United  States  many  hun- 
dred millions  of  dollars  a  year.  The  surplus  stocks  of  the 
existing  industries  will  immediately  supply  the  capital  re- 
quired, and  will  be  replaced  in  an  exceedingly  short  time  by 
the  stimulated  activity  of  those  industries;  and,  meanwhile, 
the  people  will  have  had  paid  to  them  for  labor  about  twice  the 
amount  of  capital  invested  in  the  new  industry.  Take  the 
following  as  an  illustration.  Let  us  suppose  that  a  country 
exists  (call  it,  if  you  please,  the  United  States)  where  the 
annual  product  is  six  thousand  millions  of  dollars,  and  tho 
normal  surplus  stock  of  commodities  is  equal  to  a  consump- 
tion of  sixty  days,  —  a  value  of  about  one  thousand  millions. 


24  REVIEW   OF   BASTIAT's   SOPHISMS   OP   PROTECTION.        * 

We  will  suppose  that  it  uses  largely  of  woollen  goods  pro- 
cured from  abroad.  The  people,  looking  round,  perceive  that 
the  climate  is  in  no  way  unfavorable  to  the  woollen  industry ; 
that  they  themselves  are  by  no  means  wanting  in  general 
aptitude  to  mechanical  and  manufacturing  industries;  that 
there  is  every  reason  to  suppose  the  requisite  skill  can  be 
attained  ;  and  that  well-directed  efforts  to  import  the  industry 
will  end  in  our  producing,  here,  close  at  hand,  as  good  or 
better  cloths  at  a  somewhat  lower  cost  of  labor  and  abstinence 
than  they  cost  when  imported  from  abroad.  Accordingly  the 
people  say,  let  a  law  be  passed  giving  a  protection  of  say  fifty 
per  cent  to  woollens.  The  law  is  passed,  and  here  and  there 
all  over  the  country  woollen  mills  are  commenced  by  the 
combined  capital  of  a  multitude  of  individuals.  Gradually, 
as  the  mills  are  built,  they  pay  in  their  subscriptions.  Some 
draw  out  of  the  savings  banks,  which  hold  over  a  thousand 
millions ;  some  have  money  with  other  banks  or  bankers,  the 
deposits  with  whom  exceed  another  thousand  millions ;  some 
sell  stocks  or  property.  Twenty  millions  a  month  over  the 
whole  country  will  not  make  a  ripple  in  the  money  market. 
Suppose,  then,  the  operations  are  to  the  extent  of  twenty 
millions  a  month.  As  soon  as  gathered  in  they  are  paid  out 
for  labor  and  spent  by  labor  in  buying  commodities.  The 
producers  of  commodities  now  find  their  stocks  diminishing, 
—  that  is,  a  part  of  their  unemployed  capital  is  set  free.  They 
will  know  this  if  the  free-trade  philosophers  do  not,  and  they 
will  employ  more  labor  to  meet  the  increased  demand  for 
commodities.  They  will  be  able  to  pay  out  twenty  millions 
a  month  more  for  labor,  and  this  will  bring  about  an  addi- 
tional production  of  more  than  forty  millions,  —  more  than 
sufficient  to  pay  for  the  additional  labor  and  the  construction 
of  the  woollen  mills  besides.  This  is  warranted  by  the  facts 
given  in  the  United  States  Census  for  1870,  which  showed 
that  the  mechanical  and  manufacturing  industries  in  the 
United  States  added  $1,744,000,000  to  the  value  of  the  mate- 
rial used,  and  that  of  this  $770,000,000  went  to  labor.  It 
would  seem,  then,  that  $240,000,000  a  year  would  be  invested 
in  woollen  mills  in  the  year  without  diminishing  the  floating 


REVIEW   OF  BASTIAT'S   SOPHISMS   OF  PROTECTION.  25 

capital  of  the  country  a  cent.  At  the  end  of  the  year  the 
country  will  have  woollen  mills  which  cost  8240,000,000  as 
an  addition  to  its  fixed  capital,  and  the  laboring  classes  will 
have  had  $480,000,000  additional  to  spend.  The  investors 
in  mills  will  have  withdrawn  $240,000,000  from  the  monied 
reserves,  but  the  master  mechanics  and  manufacturers  will 
have  added  an  equal  or  somewhat  larger  amount.  The  nation 
altogether  will  be  richer  by  $240,000,000  in  the  shape  of 
woollen  mills,  although  it  has  had  and  spent  $480,000,000 
more  within  the  year;  and  this  is  the  result  of  giving  fuller 
occupation  to  the  people.  More  commodities  are  made  and 
there  are  more  consumed. 

This  is  the  effect  of  the  law  which  Bastiat  says  cannot 
add  a  single  cent  to  the  wages  of  labor.  Let  business  men, 
•who  understand  accounts,  examine  the  above  theory  of  the 
protectionists,  and  compare  it  with  the  theory  of  the  free- 
traders, and  then  decide  which  represents  and  explains  the 
actual  course  of  financial  aifairs  as  they  go  on  continually 
before  our  eyes,  and  which  ought  to  be  taught  to  young  men 
who  are  preparing  for  practical  life. 

Bastiat  says  that  "  when  a  nation  isolates  itself  by  the  pro- 
hibitive system,  its  number  of  industrial  pursuits  is  certainly 
multiplied,  but  their  importance  is  diminished.  In  propor- 
tion to  their  number  they  become  less  productive, /or  the  same 
capital  and  same  skill  are  obliged  to  meet  a  greater  number 
of  difficulties.  The  fixed  capital  absorbs  a  greater  part  of 
the  circulating  capital ;  that  is  to  say,  a  greater  part  of  the 
funds  destined  to  the  payment  of  wages. 

Was  this  a  man  capable  of  teaching  the  people  of  the  United 
States?  "iso?a^e  "  is  a  good  piece  of  rhetoric.  The  abomi- 
nable, absurd,  suicidal,  ridiculous,  impoverishing  tariff  of  the 
United  States  has  so  "isolated"  the  nation  that  it  sends 
abroad  for  sale  an  annual  value  of  about  nine  hundred  mil- 
lions, and  keeps  five  or  six  times  as  much  at  home.  It  is  so 
poor  that  its  average  annual  individual  income  exceeds  that 
of  any  other  country  in  the  world,  not  even  excepting  Great 
Britain.  It  has  on  its  hands  no  starving  Ireland,  no  starving 
Orissa,  no  starving  Behar ;  nor  would  it  have  were  those 

4 


26  REVIEW   OF  CASTIAT's   SOPHISMS   OP  PROTECTION. 

countries  transferred  to  its  dominion.  For  "  starving  "  would 
then  have  to  be  substituted  in  every  case  the  words  "flour- 
ishing," "contented,"  "prosperous;"  for  they  would  be 
protected  from  hostile  industries  as  much  as  from  hostile 
armies. 

M.  Bastiat  imagined  that  a  new  industry  would  be  estab- 
lished by  capita]  drawn  from  the  old  industries,  which  would 
be  thus  cramped  and  diminished,  whereas  the  new  industry 
would  be  established  and  equipped  by  capital  already  existing, 
and  replaced  during  the  period  of  its  introduction  by  labor 
which  w^ould  otherwise  have  been  unemployed ;  and  its  prod- 
ucts, when  established,  constitute  an  additional  market  for 
the  products  of  the  old  industries,  enabling  them  all  to  increase 
their  production. 

Chapter  XIII.  is  called  "Theory  —  Practice." 
In  this  chapter  M.  Bastiat  claims  for  each  individual  the 
"/ree  disposition  of  his  own  property.'''' 

This'  is  a  proposition  in  law  or  in  social  science.  It  has 
nothing  to  do  with  political  econom}^  \vhich  is  an  inquiry 
into  the  means  of  increasing  national  opulence.  If  it  were 
shown  that  protection  was  one  means,  it  would  be  no  answer 
to  say  that  protection  invaded  natural  rights.  Either  legal 
or  social  science  would  laugh  at  any  such  pretension.^  A  cer- 
tain society  has  come  to  the  belief  that  the  opulence  of  all 
and  each  of  its  members  will  be  promoted  by  a  regulation 
that  while  A  is  employed  by  B,  C,  D,  etc.,  he  shall  in  turn 
use  the  products  of  B,  C,  D,  etc.  A  does  not  like  the  regula- 
tion. His  particular  industry  is  such  that  B,  C,  D,  etc.,  must 
employ  him,  while  he  has  discovered  that  D's  product  can 
be  got  a  little  cheaper  outside  the  society.  A  would  like  to 
work  for  the  society  and  enjoy  all  the  advantages  of  their 
custom  ;  but  he  would  prefer  not  to  give  any  custom  in  re- 
turn. He  maintains  that  by  an  opposite  arrangement  the 
society  altogether  will  grow  rich.  B,  C,  D,  etc.,  reply  that  if 
the  industry  of  D  be  abolished,  D  will  have  to  be  supported 
by  the  -rest ;  and  that  in  the  particular  circumstances  of  their 
society  it  is  vastly  cheaper  to  get  the  products  through  D  than 

1  See  note  1,  page  79. 


REVIEW   OF   BASTIAT's   SOPHISMS   OF  PROTECTION.  27 

to  get  them  from  abroad,  and  let  D  sit  idle.  "  But  D  is  a 
monopolist !  "  cries  A.  "  No  ;  "  reply  the  rest  of  the  alphabet, 
"  D  is  faithfully  working  in  his  special  field,  and  he  is  gaining 
skill  yearly.  It  is  our  will  that  his  field,  although  not  the  most 
fertile  the  society  possesses,  shall  be  cultivated.  We  believe 
that  in  this  way  we  shall  altogether  be  a  wealthier  society 
than  if  we  follow  A's  suggestion.  Let  A  convince  us  to  the 
contrary,  and  we  will  do  as  A  proposes  ;  but  calling  D  a  monop- 
olist does  not  seem  to  us  to  have  any  bearing  upon  the  cal- 
culation. It  is  simply  the  throwing  of  mud.  It  would  seem 
that  A's  arguments  must  be  weak  and  few,  if  he  finds  himself 
reduced  to  such  expedients."  "  But,"  says  A,  "  it  is  the  natural 
right  of  ever}^  man  to  do  what  he  pleases  with  his  own  prop- 
erty." Again  reply  B,  C,  D,  etc.,  "  This  is  not  the  question 
before  us.  The  question  is.  How  shall  we  all  enjoy  the  greatest 
abundance  ?  If  you  fly  away  from  the  question  we  shall  con- 
clude that  you  have  nothing  relevant  to  offer."  "  But,"  rejoins 
A,  "  political  economy  and  common  sense  tell  us  that  to  secure 
the  greatest  abundance  we  have  only  to  buy  in  the  cheapest 
market.  It  is  absurd  to  buy  of  D  at  four  dollars  what  you 
can  have  from  abroad  for  three  dollars."  "  This,"  say  B,  C,  D, 
etc.,  "  may  be  your  political  economy  and  your  common  sense  ; 
but  it  is  not  ours.  D  will  take  payment  in  that  which  we 
have  to  give  ;  he  pays  his  landlord,  his  butcher,  his  baker,  his 
tailor,  his  clergyman,  his  lawyer,  his  physician,  his  laborers, 
with  our  products,  or  with  money  which  is  expended  for  our 
products  ;  whereas,  the  foreign  producer  of  D's  commodity  can 
consume,  or  cause  to  be  consumed,  only  a  tenth  part  as  much 
of  our  products.  We  can,  therefore,  have  from  D  more  of 
his  products  than  we  can  have  from  D's  foreign  competitor, 
and  we  enable  D  to  support  himself ;  whereas,  in  the  other 
case,  he  must  be  supported  by  us.  D  is  not  producing  pine- 
apples under  glass,  nor  doing  any  other  absurdity  :  he  is  only 
producing  something  which  nominally  costs  perhaps  a  third 
more  than  it  is  offered  at  by  your  foreign  friends,  but  which 
really,  taking  all  things  into  account,  costs  less,  and  will  cost  a 
great  deal  less  when  D  has  ac([uired  greater  skill.  This  is  our 
political  economy.     Convince  us  that  we  are  wrong  and  we 


28  EEVIEW  OF   BASTIAT's   SOPHISMS   OF  PROTECTION. 

■will  act  accordingly  ;  but  you  will  never  convince  us  we  arc 
wrong  by  calling  D  a  monopolist,  a  robber,  a  thief,  a  liver 
upon  public  charity,  a  man  actuated  by  the  spirit  of  a  slave- 
holder, etc. ;  nor  will  you  convince  us  by  talking  about  the 
shame  of  preventing  our  poor  laborers  from  spending  their 
hardly  earned  wages  as  they  please.  We  recognize  all  such 
twistings  and  turnings  as  the  tricks  of  the  rhetorician.  If 
you  cannot  convince  us  by  good  sound  logic  and  common 
sense,  you  are  at  liberty  to  depart  out  of  our  prosperous 
society.  There  are  plenty  of  people  who  will  be  glad  to  buy 
you  out." 

M,  Bastiat  writes :  — 

"  You,  Messrs.  Monopolists,  maintain  that  facts  are  for  you,  and- 
that  we,  on  our  side,  have  only  theory.  You  even  flatter  yourselves 
that  this  long  series  of  public  acts,  this  old  experience  of  Europe 
which  you  invoke,  appeared  imposing  to  M.  Say ;  and  I  confess  that 
he  has  not  refuted  you  with  his  usual  sagacity. 

"  I,  for  my  part,  cannot  consent  to  give  up  to  you  the  domain  of 
facts  ;  for,  while  on  your  side  you  can  advance  only  limited  and  special 
facts,  we  can  oppose  to  them  universal  facts,  the  free  and  voluntary 
acts  of  all  men. 

"  What  do  xoe  maintain  ?     And  what  do  you  maintain  ? 

"  We  maintain  that  '  it  is  best  to  buy  from  others  what  we  can  our- 
selves produce  only  at  a  higher  price.' 

"  Toil  maintain  that  '  it  is  best  to  make  for  ourselves,  even  though 
it  should  cost  us  more  than  to  buy  from  others.' 

"  Now,  gentlemen,  putting  aside  theory,  demonstration,  reasoning 
(things  which  seem  to  nauseate  you),  which  of  these  assertions  is 
sanctioned  by  universal  practice  ?  " 

M.  Bastiat  was  in  error.  Nothing  would  delight  us  more 
than  sound  theory  and  reasoning  ;  nothing  more  than  a  real 
demonstration  ;  but  theory  which  is  built  up  by  drawing  uni- 
versal conclusions  from  particular  premises,  reasoning  which 
violates  every  canon  of  logic,  a  demonstration  drawn  from  an 
identical  proposition,  —  these  certainly  do  turn  our  stomachs. 

We  deny  that  "  it  is  always  best  to  buy  from  others  what 
we  can  ourselves  produce  only  at  a  higher  price."  The  dis- 
tribution of  the  individuals  in  a  community,  under  the  regime 


REVIEW   OF   BASTIAT'S   SOPHISMS   OF   PROTECTION.  29 

of  the  division  of  occupations,  is  not  found  to  be  so  perfect 
that  each  person  finds  employment  all  the  time  in  his  peculiar 
calling.  Many  find  themselves  out  of  work  much  of  the 
time  ;  and  this  leisure  those  who  are  thrifty  employ  to  the 
best  advantage  they  can.  The  product,  if  sold  in  the  market, 
might  not  net  more  than  half  as  much  per  day  as  they  earn 
at  their  occupations  when  they  are  at  work  ;  but  it  is  clear 
gain.  They  are  good  economists  in  so  employing  themselves 
rather  than  sit  idle  and  repine  at  the  want  of  work. 

We  protectionists  do  not  maintain  the  general  proposition 
which  you  thrust  upon  us.  We  do  not  maintain  that  "  it 
is  best  to  make  for  ourselves,  even  though  it  should  cost  us 
more  than  to  buy  of  others."  The  proposition,  by  an  artful 
misuse  of  words,  begs  the  whole  question.  Costs  us  more 
than  to  buy  of  others  !  What  does  this  mean?  What  is  the 
cost  to  an  individual  of  a  piece  of  work  done  when  he  would 
otherwise  have  done  nothing  ?  What  is  the  cost  to  a  nation 
of  work  done  by  labor  otherwise  unoccupied  assisted  by  cap- 
ital otherwise  unemployed  ?  What  we  do  maintain  is,  that 
for  an  individual  it  is  best  to  do  something  for  himself  or 
others  during  the -days  when  his  special  trade  or  art  leaves 
him  unoccupied ;  and  that,  for  a  nation,  it  is  best  to  promote 
that  distribution  of  labor  and  capital  which  evolves  the 
greatest  gross  annual  product ;  for  the  gross  annual  product 
is  the  sum  of  the  net  individual  incomes,  as  has  been  re'cog- 
nized  both  by  Adam  Smith  and  J.  B.  Say.  The  individual 
must  be  left,  in  his  local  position,  to  find  out  what  is  best  for 
him  to  do.  He  will  do  one  thing  under  free  trade  —  quite 
another  thing  under  protective  laws.  What  he  does  under 
one  system  affords  no  evidence  of  the  goodness  or  badness 
of  the  other  ;  nor  can  the  fact  that  he  does  this  or  that  afford 
any  evidence  that  this  or  that  will  promote  the  general  in- 
terest. Adam  Smith,  indeed,  after  adducing  a  few  instances 
in  which  he  thought  individuals  acting  solely  with  a  view  to 
their  own  interests  would,  nevertheless,  unintentionally  pro- 
mote that  of  the  society,  added  the  words,  —  "  and  he  (the 
individual)  is  in  this,  as  in  many  other  cases,  led  bj'  an  in- 
visible hand  to  promote  an  end  which  was  no  part  of  his 


30  REVIEW   OF   BASTIAT's   SOPHISMS   OF   PROTECTION. 

intention ; "  but  it  will  be  observed  that  Adam  Smitli  had  not 
the  folly  to  put  this  forth  as  a  true  induction.  He  threw  it 
out  as  a  rhetorical  flourish,  knowing  well  that  a  thoughtless 
crowd  Would  seize  upon  it  as  a  general  proposition  revealing 
the  deep  plans  of  Providence  ;  and  that,  having  so  seized  upon 
it,  they  would  be  too  innocent  of  logic  to  be  shaken  in  their 
faith  by  any  number  of  negative  instances.  But  fortunat-ely 
all  men  are  not  imposed  upon  by  a  rhetorical  flourish.  Indeed, 
Adam  Smith  did  not  thus  impose  upon  himself,  for  he  advo- 
cated government  restraints  upon  the  issues  of  banks,  and 
defended  it  in  Book  II.,  Chapter  11.,  of  the  "  Wealth  of  Na- 
tions "  (towards  the  end),  in  the  following  words  :  — 

"  To  restrain  private  people,  it  may  be  said,  from  receiving  in  pay- 
ment the  promissory  notes  of  a  banker,  for  any  sum,  whether  great  or 
small,  when  they  themselves  are  willing  to  receive  them ;  or  to 
restrain  a  banker  from  issuing  such  notes,  when  all  his  neighbors  are 
willing  to  accept  them,  is  a  manifest  violation  of  that  natural  liberty 
which  it  is  the  proper  business  of  law,  not  to  infringe,  but  to  sup- 
port*. Such  regulations  may,  no  doubt,  be  considered  as  in  some 
respect  a  violation  of  natural  liberty.  But  those  exertions  of  the 
natural  liberty  of  a  few  individuals,  which  might  endanger  the  security 
of  the  whole  society,  are,  and  ought  to  be,  restrained  by  the  laws  of 
all  governments,  —  of  the  most  free  as  well  as  of  the  most  despotical. 
The  obligation  of  building  party  walls,  in  order  to  prevent  communi- 
cation of  fire,  is  a  violation  of  natural  liberty,  exactly  of  the  same 
kind  with  the  regulations  of  the  banking  trade  which  are  here 
proposed." 

But  if  it  did  not  impose  upon  Adam  Smith  himself,  it  did 
upon  many  others,  as  may  be  inferred  from  the  following 
extract  from  Mr.  John  Stuart  Mill's  "  Political  Economy," 
Book  v.,  Chapter  XL,  paragraph  12  :  — 

"  Mr,  "Wakefield  therefore  proposed  to  check  the  premature  occupa- 
tion of  land,  and  dispersion  of  the  people,  by  putting  upon  all  unap- 
propriated lands  a  rather  high  price,  the  proceeds  of  which  were  to  be 
expended  in  conveying  emigrant  laborers  from  the  mother  country. 

"  This  salutary  provision,  however,  has  been  objected  to,  in  the 
name  and  on  the  authority  of  what  was  represented  as  the  great  prin- 
ciple of  political  economy,  that  individuals  are  the  best  judges  of  their 


REVIEW   OF   BASTIAT  S  SOPHISMS   OF   PROTECTION.  31 

own  interest.  It  was  said  that  when  things  are  left  to  themselves,  land 
is  appropriated  and  occupied  by  the  spontaneous  choice  of  individuals,  in 
the  quantities  -and  at  the  times  most  advantageous  to  each  person,  and 
therefore  to  the  community  generally  ;  and  that  to  interpose  artificial 
obstacles  to  their  obtaining  laud  is  to  prevent  them  from  adopting  the 
course  which,  in  their  own  judgment,  is  most  beneficial  to  them,  from  a 
self-conceited  notion  of  the  legislator,  that  he  knows  what  is  most  for 
their  interests,  better  than  they  do  themselves.  Now  this  is  a  complete 
misunderstanding,  either  of  the  system  itself,  or  of  the  principle  with 
which  it  is  alleged  to  conflict.  The  oversight  is  similar  to  that  which  we 
have  just  seen  exemplified  on  the  subject  of  hours  of  labor.  However 
beneficial  it  might  be  to  the  colony  in  the  aggregate,  and  to  each  individ- 
ual composing  it,  that  no  one  should  occupy  more  land  than  he  can 
properly  cultivate,  nor  become  a  proprietor  until  there  are  other  laborers 
ready  to  take  his  place  in  working  for  hire,  it  can  never  be  the  interest 
of  an  individual  to  exercise  this  forbearance,  unless  he  is  assured  that 
others  will  do  so  too.  Surrounded  by  settlers  who  have  each  their 
thousand  acres,  how  is  he  benefited  by  restricting  himself  to  fifty  ?  or 
what  does  he  gain  by  deferring  the  acquisition  for  a  few  years,  if  all 
other  laborers  rush  to  convert  their  first  earnings  into  estates  in  the 
wilderness,  several  miles  apart  from  one  another  ?  If  they,  by  seizing 
on  land,  prevent  the  formation  of  a  class  of  laborers  for  wages,  he  will 
not,  by  postponing  the  time  of  his  becoming  a  proprietor,  be  enabled 
to  employ  the  land  to  any  greater  advantage  when  he  does  obtain  it ; 
to  what  end  should  he  place  himself  in  what  will  appear  to  him  and 
others  a  position  of  inferiority,  by  remaining  a  laborer  when  all 
around  him  are  proprietors?  It  is  the  interest  of  eacli  to  do  what  is 
good  for  all,  but  only  if  others  will  do  likewise. 

"  The  principle  that  each  is  the  best  judge  of  his  own  interest, 
understood  as  these  objectors  understand  it,  would  prove  that  govern- 
ments ought  not  to  fulfil  any  of  their  acknowledged  duties,  —  ought 
not,  in  fact,  to  exist  at  all.  It  is  greatly  the  interest  of  the  community, 
collectively  and  individually,  not  to  rob  or  defraud  one  another  ;  but 
there  is  not  the  less  necessity  for  laws  to  punish  robbery  and  fraud  ; 
because,  although  it  is  the  interest  of  each  that  nobody  should  rob  or 
cheat,  it  cannot  be  any  one's  interest  to  refrain  from  robbing  and 
cheating  others  when  all  others  are  permitted  to  rob  and  cheat  him. 
Penal  laws  exist  at  tdl,  chiefly  for  this  reason,  because  an  even  unani-  ^ 
mous  opinion  that  a  certain  line  of  conduct  is  for  the  general  interest, 
does  not  make  it  people's  individual  interest  to  adhere  to  that  line  of 
conduct." 


32  REVIEW   OF   BASTIAT's   SOPHISMS   OF  PROTECTION. 

By  parity  of  reasoning,  we  must  say  that  w^hen  it  is  the 
interest  of  the  community,  collectively  and  individually,  to 
build  up  a  home  market  by  buying  "  each  of  the  other,"  there 
is  not  the  less  necessity  for  protective  laws  ;  because  although 
it  is  the  interest  of  each  that  nobody  should  buy  some  article 
abroad,  it  cannot  be  any  one's  interest  to  refrain  from  buying 
abroad  when  all  others  are  permitted  to  do  so. 

It  will  be  seen  that  both  Adam  Smith  and  Mr.  Mill  take 
the  pretty  little  dream  of  the  invisible  hand,  and  the  doctrine 
that  individuals  can  judge  best  about  their  own  interests,  at 
their  true  value.  They  may  be  used  to  support  a  position 
which  they  wish  to  establish ;  but  they  are  really  of  no  im- 
portance. They  neither  of  them  put  forward  Bastiat's 
absurdity  that  each  individual  by  the  right  of  property  is 
invested  with  power  to  veto  the  action  of  the  whole  com- 
munity. 

M.  Bastiat  continues:  — 

"  You  are  not  then  sustained  by  practice,  since  it  would  be  impossible, 
were  you  to  search  the  world,  to  show  us  a  single  man  who  acts  accord- 
ing to  your  principle." 

As  we  have  seen  that  every  prudent  and  thrifty  individual 
acts  contrary  to  the  principles  laid  down  by  M.  Bastiat  as 
those  of  free  trade,  and  in  accordance  with  the  real  principles 
of  the  protective  theory,  the  intrepidity  of  the  above  assertion 
is  marvellous. 

The  rest  of  the  chapter  is  full  of  similar  intrepidity  ;  im- 
puting admissions  and  arguments  which  protectionists  never 
make,  and  then  securing  to  himself  an  easy  victory  over  his 
men  of  straw.     He  concludes  as  follows  :  — 

"  And  all  this  for  what  ?  To  prove  to  us  that  we  consumers,  —  we 
are  your  property ;  that  we  belong  to  you,  soul  and  body ;  that  you 
have  an  exclusive  right  on  our  stomachs  and  our  limbs;  that  it  is  your 
right  to  feed  and  dress  us  at  your  own  price,  however  great  your 
ignorance,  your  rapacity,  or  the  inferiority  of  your  work  !  Truly,  then, 
your  system  is  one  not  founded  upon  practice ;  it  is  one  of  abstraction 
—  of  extortion." 


REVIEW   OF   BASTIAT's   SOPHISMS   OF  PROTECTION.  S3 

Pray  who  are  these  obstreperous  consumers,  in  whose  name 
]\I.  Bastiat  presumes  to  speak  ?  Nineteen  twentieths  of  the 
consumers,  as  already  shown,  are  also  producers,  either  of 
commodities  or  services,  with  whom  the  onlj^  means  of  pur- 
chase are  their  products  ;  with  whom  to  produce  is  the  con- 
dition precedent  of  consum]3tion.  He  certainl}^  had  no  reason 
to  speak  for  them.  Nor  is  the  case  au}^  better  with  the  re- 
maining twentieth.  The  gross  annual  product  of  commod- 
ities must  be  consumed  or  there  will  ensue  immediate  glut 
and  stagnation.  In  the  long  run  and  upon  an  average  of 
years  it  is  consumed  ;  being  distributed  in  wages,  profits,  and 
rent,  in  proportion  to  the  relative  importance  to  the  com- 
munity of  the  labor  and  the  capital  which  each  brings  to  the 
service  of  the  community.  An  augmented  annual  production 
must  then  issue  in  an  augmented  recompense  to  both  labor 
and  capital.  The  totality  of  consumers  is  benefited ;  and 
each  is  benefited  in  proportion  to  the  importance  the  con- 
tribution which  his  labor  or  his  capital  makes  to  the  gross 
product  which  has  to  be  divided.  The  manufacturer,  then, 
who,  in  these  United  States,  is  secretly  sighing  for  a  reduction 
of  wages  which  will  enable  him  to  compete  in  the  "  great 
market  of  the  world  "  with  Great  Britain,  is  in  reality  sighing 
for  a  gain  which  must  bring  with  it  a  much  greater  loss  in 
the  diminution  of  the  vastly  more  extensive  home  market ; 
and  the  clergyman,  lawyer,  physician,  literary  man,  and  all 
receivers  of  salaries,  etc.,  labor  under  a  similar  hallucination, 
when  they  long  for  the  cheaper  products  of  cheaper  labor 
from  across  the  Atlantic  ;  for  with  such  cheaper  products 
must  come  less  employment  for  the  home  population,  and  a 
diminution  in  the  gross  annual  product  which  pays  not  only 
all  labor  but  all  salaries,  all  fees,  all  incomes.  This  might  not 
be  true  if  the  whole  of  our  productive  population  (actual 
and  potential)  could  be  employed  upon  the  branches  of 
production  in  which  we  have  an  advantage,  and  employed 
without  overstocking  the  markets  of  the  world  ;  but  it  appears 
to  be  indubitably  true  in  the  actual  situation  in  which  the 
United  States  and  other  nations  are  now  i)laccd. 

Possibly  a  world  might  exist  where  it  would  promote  the 

6 


3-i  REVIEW   OP   BASTIAT's   SOPHISMS   OF   PROTECTION. 

opulence  of  eacli  nation,  and  of  all  nations,  were  each  to  con- 
fine itself  to  those  fields  of  production  in  which  it  has  an 
advantage  ;  but  we  are  only  concerned  with  the  world  as  it  is  ; 
and  in  this  neither  inductive  nor  deductive  reasoning  leads  to 
the  conviction  that  the  best  possible  arrangement  springs 
"  naturally  "  from  the  unregulated  strife  of  individual  com- 
petition, —  the  clash  of  chaotic  cupidities.  The  laws  of 
nature  are  manifold.  Man  studies  them  ;  and,  by  artificial 
collocation  of  materials  and  forces,  brings  those  into  play 
which  promote  his  ends.  He  does  this  in  every  other  depart- 
ment. Why  should  he  not  do  it  in  the  department  which 
aims  at  social  opulence,  at  abundance  ?  H^  sees  in  other 
nations  arts  which  give  a  prodigious  power  over  nature ;  why 
should  he  not  seek  to  acquire  them  ?  Nature  invites  and  re- 
wards study  with  a  most  liberal  hand  in  all  other  fields  ;  has 
she  forbidden  him  to  study  this  ?  No  ;  it  is  not  nature  that  has 
forbidden  him,  but  only  Adam  Smith  !  —  a  very  sagacious  and 
eminent  author  indeed,  but  one  hardly  justified  in  warning  off 
the  human  mind  from  a  most  important  field  of  investigation, 
—  perhaps,  indeed,  the  most  important  so  far  as  material  well- 
being  is  concerned.  That  individual  interest  can  rarely  lead 
to  the  acquirement  of  those  arts  has  been  admirably  shown 
by  John  Ray  in  a  work  which  the  writer  has  just  referred  to 
with  delight  and  instruction.  That  is  the  work  of  a  philoso- 
pher and  seeker  after  truth  :  everywhere  cool  logic,  veracity, 
dignity ;  earnestness,  indeed,  but  earnestness  to  discover  what 
is  right,  not  earnestness  to  prove  this  or  that  preconcep- 
tion to  be  right.  There  is  no  appeal  to  the  passions,  to  anger, 
to  pity,  to  envy,  to  greed,  nor  even  to  religious  prejudices. 
He  never  misrepresents  the  arguments  or  ideas  of  Adam 
Smith,  with  whom  he  differs  ;  never  puts  into  his  mouth  what 
he  did  not  say  ;  never  bursts  into  passionate  rhetorical  spasms, 
like  Bastiat.  He  neither  disgraces  himself  nor  affronts  his 
readers  by  the  exercise  of  any  such  arts.  If  a  similar  work 
is  to  be  found  upon  the  free-trade  side  of  political  economy, 
it  is  a  pity  the  League  should  have  paid  so  poor  a  compliment 
to  the  good  sense  of  the  American  people  as  to  have  preferred 
presenting  them  with  the  "  Sophisms  "  of  Bastiat. 


REVIEW   OF  BASTIAT'S   SOPHISMS   OF   PROTECTION.  35 

Chapter  XIV.  is  entitled  "  Conflicting  Principles." 
In  this  M.  Bastiat  starts  from  this  premise:  — 

"  The  disposing  by  law  of  consumers,  forcing  them  to  the  support 
of  home  industry,  is  an  encroachment  upon  their  liberty,  the  forbid- 
ding of  an  action  (mutual  exchange)  which  is  in  no  way  opposed  to 
morality.     In  a  word,  it  is  an  act  of  injustice" 

Under  the  regime  of  the  division  of  employments,  each 
individual  produces  a  certain  article  or  articles  with  which  to 
buy  whatever  he  requires.  The  greater  the  value  of  what  he 
produces,  the  greater  the  amount  that  he  can  consume.  If 
by  buying  of  A  he  gets  more  than  by  buying  of  B,  he  does 
so.  His  interests  as  a  consumer  are  identical  with  his  interests 
as  a  producer. 

But  has  a  nation  no  rights  ?  There  is  a  nation  called  the 
United  States  :  fifty  millions  of  persons,  soon  to  be  a  hundred 
millions.  It  possesses  vast  resources  still  undeveloped.  It 
says  to  all  the  world,  "  Come  over  and  share  our  pros- 
perity. All  we  ask  is  that  you  should  live  like  men  as  we 
do ;  and  that,  being  furnished  with  work  by  us,  we  taking 
your  products  and  services,  you  shall  in  turn  consume  the 
products  and  services  of  others  among  us  so  far  as  our  laws 
and  customs  require.  We  have  become  convinced  that  this 
system  promotes  the  general  good,  and  that  under  it  you  will 
yourselves  enjoy  a  greater  abundance  than  under  any  other." 
"  But,"  says  A,  "  this  is  not  what  I  desire.  I  would  like  to 
have  you  give  me  high  wages  ;  but,  when  I  have  got  them,  I 
have  a  right  to  buy  of  whomsoever  I  please  ;  and  C,  across  the 
Atlantic,  being  wilHng  to  live  a  great  deal  cheaper  than  B, 
can  give  me  considerably  more  for  my  wages  than  B  will" 
The  United  States  might  reply  :  "  If  you  have  any  such  right, 
then  one  individual  can  veto  the  action  of  fifty  millions,  mak- 
ing their  interests  give  way  to  what  he  supposes  to  be  his,  but 
which  we  are  satisfied  are  not  his,  because  if  A  is  to  be 
allowed  to  act  in  this  way  every  other  citizen  must  be  allowed 
to  do  so  ;  and  then,  a  large  proportion  of  our  industries  being 
transferred  abroad,  higli  w^ages  will  disappear,  and  with  them 
the  ability  to  buy  the  cheap  foreign  goods."    "  But  this  is  not 


36.  REVIEW   OF   BASTIAT'S  SOPHISMS   OF   PROTECTION. 

SO,"  cries  A.  "  Adam  Smith  and  all  the  illustrious  and  learned 
foreign  economists  down  to  M.  Bastiat  agree  that  it  is  best  to 
allow  every  man  to  buy  where  he  can  buy  cheapest.  They 
assure  me  tliat  they  have  demonstrated  the  doctrine,  and  that 
none  but  ignorant  people  have  any  doubt  upon  the  subject." 
The  fifty  millions  might  reply  :  "  Protectionist  writers  have 
gone  over  those  reasonings  and  pointed  out  gross  blunders  in 
them ;  blunders  that  would  ruin  the  reputation  of  any  of  us 
ignorant  people.  Moreover,  we  see  clearly  enough  that  where 
much  is  produced  there  is  much  to  consume.  If  half  of  us, 
working  in  the  industries  where  we  have  a  decided  advantage, 
can  produce  as  much  as  we  all  require,  and  as  much  as  can  find 
a  good  market  abroad,  it  needs  no  philosopher  to  see  that  the 
other  half  of  the  population  had  better  be  employed,  even 
upon  less  productive  fields.  This  is  our  theory  ;  and  under 
it  we  have  always  prospered,  except  during  the  years  1873- 
1879,  when  other  sufiicient  causes  produced  depression.^ 
Whenever  we  have  faltered  in  this  policy  we  have  suffered, 
even  during  the  years  following  18-19,  when  Australian 
and  Californian  gold  favored  prosperity  everywhere.  We 
believe  that  both  inductive  and  deductive  reasoning  war- 
rant our  practice  ;  and  if  A  does  not  think  so  he  had  better 
go  to  England  and  .stay  there.  To  allow  him  to  remain  and 
do  as  he  likes,  to  the  detriment  of  the  community  which 
gives  him  his  opportunity  of  gaining  a  living,  —  this^  in- 
deed, would  be  an  injustice.  His  demand  is  opposed  to 
morality.  Every  moral  teacher  from  Socrates  down  would 
so  declare  it." 

There  is  no  ground  then  for  M.  Bastiat's  deduction  that 
according  to  protectionist  reasoning  utility  is  incompatible 
with  the  internal  administration  of  justice  or  incompatible 
with  the  maintenance  of  external  peace.  These  are  M.  Bas- 
tiat's conclusions,  indeed,  but  they  cannot  be  worked  out  from 
any  sound  premises.  As  to  the  foreign  consumer,  we  have  no 
charge  of  his  interests.  By  looking  after  those  of  the  United 
States  we  shall  do  all  we  have  any  title  to  do.  By  taking 
good  care  of  our  own  affiiirs,  we  may  very  likely  promote 
those  of  the  rest  of  the  world  as  effectually  as  if  we  assumed 

1  See  note  2,  page  79. 


REVIEW   OF  BASTIAT's   SOPHISMS   OF   PROTECTION.  37 

the  role  of  general  philanthropist.  A  multitude  of  opulent 
nations  would  still  have  avast  international  trade,  —  probably 
much  larger  in  actual  volume  (though  less,  perhaps,  in  pro- 
portion to  the  total  annual  products)  than  can  be  supported 
between  the  same  nations  impoverished  by  free  trade. 

There  is  no  call,  then,  for  M.  Bastiat's  rhapsodies  and  dec- 
lamations about  horrible  blasphemy,  liberty,  utility,  justice, 
peace,  and  the  manifestation  of  the  wisdom  of  God  as  shown 
in  the  sublime  harmony  of  material  creation.  The  sober  and 
clear-headed  American  people  are  not  likely  to  be  fooled  in 
this  way. 

Chapter  XV.  is  entitled  "Reciprocity  Again." 
This  chapter  argues  that  an  individual  in  a  nation  having 
no  external  relations  sells  his  product  for  money,  "  casts  his 
product  into  tlie  national  circulation,"  and  by  means  of  money 
withdraws  a  like  value ;  that  if  thereafter  the  exchanges  of 
the  nation  be  opened  —  made  free  —  with  other  nations,  the 
individual  will  in  like  manner  cast  his  product  into  the  larger 
market,  that  of  the  world. 

Bat  induction  from  facts  and  deductive  reasoning  alike 
show  that  the  individual  may  find  the  universal  market 
smaller  than  the  national.  The  farmer  may  have  an  advan- 
tage not  only  in  growing  wheat,  cotton,  and  tobacco,  but  also 
in  growing  green  crops  and  market  products  not  susceptible 
of  distant  conveyance.  He  wishes  to  exchange  these  for 
manufactured  goods  which  can  be  brought  from  the  ends  of 
the  earth.  He  throws  them  into  the  market  of  the  world  ; 
but  the  world  market  for  them  is  bounded  by  a  radius  of  a  few 
tens  of  miles.  He  can  produce  of  them  (his  most  in-ofitable 
crops)  only  what  can  be  taken  by  the  population  occupying 
the  limited  area.  Put  a  cotton  or  woollen  mill  or  any  other 
manufacturing  establishment  near  the  farmer  and  his  possible 
production  of  salable  articles,  and  consequently  his  possible 
consumption  is  increased  greatly.  The  laissez-faire  system 
produces  here  a  smaller  product  for  the  individual,  for  his 
immediate  vicinity,  for  his  nation,  and  for  the  world.  If  he 
buys  that  which  comes  from  a  great  distance,  he  must  raise 


88  DEYIEW   OF   BASTIAT's   SOPHISMS   OF   PROTECTION. 

that  which  can  be  carried  to  a  great  distance,  —  that  is,  a  few 
articles,  for  which  the  distant  marlcets  are  very  limited. 

Bastiat  next  reasons  from  individual  action  to  national, 
forgetting  that  nations  are  few  and  individuals  many.  A 
casts  liis  individual  product  into  the  national  market,  and  sells 
it.  Innumerable  producers  compete  to  supply  him  with  what 
he  needs.  Frequent  combinations  among  them  to  fleece  him 
arebej^ondthe  range  of  probability  ;  and  any  occurrence  which 
should  stop  his  supply  is  scarcely  possible.  It  is  not  so  with 
nations.  They  are  few,  and  the  possible  events  which  might 
stop  a  foreign  supply  are  very  many. 

Finally,  Bastiat  says  that  if  the  supply  and  demand  from 
abroad  should  stop,  we  should  only  be  forced  upon  isolation, 
to  reach  which  is  the  ideal  of  the  protective  system. 

But  it  has  been  already  observed  that  protection  does  not 
aim  at  nor  tend  to  isolatiori.  It  aims  at  and  accomplishes  a 
comparative  independence  as  to  the  great  necessaries  of  life, 
and  brings  about  a  great  increase  of  opulence,  from  which 
springs  the  ability  to  enjoy  a  thousand  luxuries  which  can 
really  be  got  to  better  advantage  elsewhere.  The  products 
which  the  United  States  throws  into  the  market  of  the  world 
are  thirty  times  greater  (per  head)  than  free-trade  India 
throws ;  they  are  many  times  greater  than  those  of  Portugal, 
Turkey,  Ireland,  and  nearly  equal  to  those  of  Great  Britain's 
American  colonies,  being  $16.70  per  head  to  $19.04  per  head. 
This  last  is  a  remarkable  fact.  The  United  States  makes  for 
herself  vastly  more,  per  head,  than  those  colonies  consume, 
and  still  sells  in  the  market  of  the  world  a  surplus  as  great, 
or  nearl}'  as  great,  as  theirs  under  free  trade. 

We  say  that  this  is  a  fact.  You  cannot  deny  it.  But  you 
deny  that  the  fact  has  any  connection  with  protection.  We 
reply  that  by  deductive  reasoning  we  show  that  such  a  fact 
ought  to  occur  under  protection-;  and  by  observations  which 
you  cannot  and  do  not  deny,  we  show  that  it  does  occur. 
You  reply  that  you  have  shown  by  deductive  reasoning  that 
no  such  fact  could  follow  such  a  cause.  We  answer,  in  turn, 
that  we  have  pointed  out  errors  in  your  deductions,  errors 
which  absolutely  annihilate  them ;  while  you  have  not  found 


REVIEW   OF   BASTIATS   SOPHISMS   OF   PROTECTION.  39 

any  errors  in  our  deductions,  but  answer  thera  only  by  a 
rej^etition  of  your  own  (just  as  if  they  had  never  been  con- 
futed), and  by  a  vast  amount  of  declamation  and  rhetoric. 
You  do  not  prove  the  contradictory  of  our  propositions,  but 
only  the  contradictory  of  some  other  propositions,  which  you 
put  into  our  mouths,  but  which  we  ourselves  never  dreamed  of. 

Chapter  XVI.,  —  "Obstructed  Rivers  pleading  for  the 
Prohibitionists." 

This  is  the  case  of  the  Doiiro,  which,  according  to  M. 
Bastiat,  neitlier  Spain  nor  Portugal  was  willing  to  improve, 
for  fear  that  grain  would  j)ass  between  the  two  countries. 
The  chapter  does  not  give  sufficient  facts  to  enable  a  protec- 
tionist to  decide  whether,  under  the  circumstances,  it  was  or 
was  not  desirable  to  expend  money  in  removing  the  obstruc- 
tions. To  M.  Bastiat  the  case  appeared  simple.  He  was  for 
removing  all  obstructions  to  individual  action.  To  protec- 
tionists, who  do  not  believe  that  individual'action  necessarily 
leads  to  the  best  result  for  a  community,  the  case  is  not  so 
clear.  We  believe  that  Adam  Smith  was  right  in  advocating 
the  regulation  by  the  society  of  individual  action  regarding 
the  currency,  and  that  Air.  John  Stuart  Mill  was  right  in 
advocating  similar  regulations  regarding  a  variety  of  matters 
touching  the  general  good.  We  believe-  that  laissez  /aire 
and  giving  perfect  freedom  to  individual  action  is  not  good 
in  theory,  and  has  never  3'et  anywhere  been  adopted  in 
practice. 

Chapter  XVIT.  is  entitled  "  A  Negative  Railroad." 
This  chapter  is  a  good  specimen  of  M.  Bastiat's  reasoning. 
By  diligent  search  or  lively  invention,  he  produces  an  absurd 
proposal  that  a  railroad  should  have  a  break  or  terminus  at 
Bordeaux,  in  order  that  goods  and  passengers  should  be  thus 
forced  to  contribute  to  the  profits  of  the  boatmen,  porters,' 
commission-merchants,  hotel-keepers,  etc.  He  then  argues 
that  IF  such  profit  be  conformable  to  the  public  interest,  there 
ought  to  be  similar  breaks  elsewhere,  and  tliese  too  would  be 
for  the  general  good,  and  for  the  interest  of  national  labor. 


40  REVIEW   OF   BASTIAT's   SOPHISMS   OF  PROTECTION. 

"  For  it  is  certain  that  in  proportion  to  the  number  of  these 
breaks  or  termini  will  be  the  increase  in  consignments,  com- 
missions, lading,  unlading,  etc."  A  protectionist  would  say  at 
once  that  the  first  break  was  detrimental,  and  that  many  would 
utterly  prevent  all  consignments,  commissions,  etc.,  coming 
thus  to  a  conclusion  the  opposite  of  that  which  M.  Bastiat 
says  is  certain,  —  a  conclusion,  by  the  way,  which  would  not 
be  certain,  even  if  the  premises  were  sound.  M.  Bastiat, 
however,  insists  — 

"  that  the  restrictive  principle  is  identical  with  that  which  would 
maintain  this  system  of  breaks  ;  H  is  the  sacrifice  of  the  consumer  to 
the  producer,  —  of  the  end  to  the  means." 

This  shows,  out  of  M.  Bastiat's  own  mouth,  that  he  had  no 
conception  of  what  protection  does  actually  aim  at.  It  aims 
at  the  greatest  possible  consumption,  but  recognizes  (what 
M.  Bastiat  apparently  did  not)  that,  before  an  individual  or 
a  nation  can  consume  largely,  he  or  it  must  produce.  Pro- 
tectionists are  as  anxious  as  free-traders  —  more  anxious  than 
free-traders  —  to  remove  obstacles,  to  improve  machinery,  to 
improve  tools,  to  improve  the  arrangement  and  organization 
of  society.  It  aims  at  whatever  will  increase  the  gross  annual 
product.  Evidently  M.  Bastiat  never  learned  such  a  doc- 
trine; but  he  might  have  deduced  it  by  easy  economical 
reasoning  from  the  sound  parts  of  Adam  Smith  and  J.B.Say. 
The  trouble  with  him  was  that  he  gathered  in  their  errors, 
and  passed  by  their  sound  reasoning  ;  that  he  took  in  sober 
earnest,  and  as  universal  generalizations,  what  they  threw  out 
as  rhetorical  flourishes.  Tinsel  caught  his  eye  quicker  than 
solid  gold.  So  lie  swallowed  laissez  faire,  and  thought  to 
build  a  science  upon  a  proposition  drawn  from  a  few  and 
uncertain  instances,  and  forbidden  by  innumerable  negative 
instances.  M.  Bastiat  certainly  profited  little  from  the 
"  Novum  Organum,"  or  from  Mr.  John  Stuart  Mill's 
"  Logic." 

Chapter  XVIII.,  —  "  There  are  no  Absolute  Principles." 
M.  Bastiat  scoffs  at  the  idea  that  there  are  in  political 
economj'-  no  absolute  principles,  and  reaffirms  that  the  free- 


I 


REVIEW   OF  BASTIAT's   SOPHISJNIS   OF  PROTECTION.  41 

dom  of  exchanges  is  an  absolute  principle.     He  deduces  this 
from  the  provisioning  of  a  great  city.     lie  says  :  — 

"  Contemplating  this  great  city  of  Paris,  I  have  thought  to  myself : 
Here  are  a  million  of  human  beings,  who  would  die  in  a  few  days  if 
provisions  of  every  kind  did  not  How  towards  this  vast  metropolis. 
The  imagination  is  unable  to  contemplate  the  multiplicity  of  ol)jects 
which  to-morrow  must  enter  its  gates,  to  prevent  the  Hfe  of  its  inhabi- 
tants terminating  in  famine,  riot,  or  pillage.  And  yet,  at  this  moment 
all  are  asleep,  without  feeling  one  moment's  uneasiness  from  the 
contemplation  of  this  frightful  possibility.  On  the  other  side,  we 
see  eighty  departments  who  have  this  day  labored,  without  concert, 
without  mutual  understanding,  for  the  victualling  of  Paris.  How  can 
each  day  bring  just  what  is  necessary^  nothing  less,  nothing  more,  to 
this  gigantic  market  ?  What  is  the  ingenious  and  secret  power  which 
presides  over  the  astonishing  regularity  of  such  complicated  move- 
ments,—  a  regularity  in  which  we  all  have  so  implicit,  though  thought- 
less, a  faith  ;  on  which  our  comfort,  our  very  existence  depends  ?  This 
power  is  an  absolute  principle,  the  principle  of  freedom  in  exchanges. 
We  have  faith  in  that  inner  light  which  Providence  has  placed  in  the 
hearts  of  all  men,  confiding  to  it  the  preservation  and  amelioration 
of  our  species,  —  interest,  since  we  must  give  its  name,  so  vigilant,  so 
active,  having  so  much  forecast,  when  allowed  its  free  action." 

M.  Bastiat  then  declares  that  no  minister,  however  superior 
his  abilities,  could  arrange  things  so  well,  and  that  if  he 
should  attempt  it,  the  actually  existing  misery  would  be 
infinitely  increased,  etc.,  etc. 

This  chapter  may  be  good,  considered  as  declamation  or 
rhetoric,  but  we  fear  it  would  hardly  stand  a  test  by  Mr. 
Mill's  canons  of  inductive  logic.  What  M.  Bastiat  under- 
took to  prove  was  that  in  political  economy  it  was  an  absolute 
(by  which  he  must  have  meant  a  universal)  proposition  that 
freedom  in  exchanges  is,  in  every  case,  promotive  of  opu- 
lence ;  or  that  every  constraint  put  upon  the  freedom  of 
exchanges  is  unfavorable  to  progress  in  opulence. 

His  method  of  proof  was  to  present  the  case  of  a  great 
city  provisioned  regularly  without  any  supervision.  He  rep- 
resents that  there  is  never  too  much,  never  too  little,  etc., 
statements  which  it  would  be  necessary  to  verify,  and  which 

6 


42  REVIEW    OF   BASTIAT'S   SOPHISMS   OF   PROTECTION. 

could  not  be  verified.  On  the  contrary,  it  would  be  found 
that  at  times  there  are  short,  and  at  times  excessive,  supplies ; 
that  much  food  perishes  unused  almost  in  the  sight,  nay, 
quite  in  the  sight,  of  hungry  crowds ;  that  much  clothing 
wears  out  on  the  shop  shelves  in  the  sight  of  shivering  myriads. 
M.  Bastiat  alleges  that  matters  would  be  much  worse  under 
the  management  of  a  single  head  with  suitable  assistants,  but 
he  does  not  prove  this  ;  and  a  general  proposition  intended  to 
be  the  basis  of  an  important  science  should  not  rest  upon 
opinion.  As  there  is  great  irregularity  of  supply,  so  great 
that  some  90  per  cent  of  the  mercantile  classes  (who  under- 
take the  management  of  such  matters)  fail  and  become 
bankrupts,  the  results  of  free  competition  are  evidently  far 
from  perfect.  Whether  they  could  or  could  not  be  better 
managed  by  a  government  bureau  is  a  matter  of  opinion,  not 
a  matter  of  certaint3\  To  establish  M.  Bastiat's  proposition 
inductively,  it  is  necessary  to  find  not  only  instances  in  which 
opulence  attends  freedom  of  exchange,  but  also  to  show  that 
poverty  never  attends  it.  How  then  about  Ireland,  Turkey, 
Portugal,  India  ;  and,  to  a  minor  extent,  but  still  to  a  very 
observable  extent,  all  the  American  colonies  of  Great  Britain  ? 
Freedom  of  exchange  has  not  prevented  millions  from  starv- 
ing in  Ireland  and  India  in  the  midst  of  all  the  possibilities 
of  plentv.  These  are  negative  instances,  any  one  of  which 
would  be  sufficient  to  forbid  the  proposed  generalization.  If, 
then,  it  is  to  be  proved  that  freedom  of  exchange  is  even  one 
among  many  causes  of  opulence,  it  must  be  proved  deductively. 
It  cannot  be  proved  a  'posteriori  in  the  face  of  numerous  nega- 
tive instances.  Let  us  then  try  the  case  deductively,  and 
first  with  regard  to  an  individual.  A  produces  something. 
Free  trade  says,  Stick  to  your  particular  business,  and  buy 
with  your  products,  in  which  you  have  an  advantage,  the 
other  things  you  desire  which  are  produced  by  persons  who 
have  an  advantage  over  you  in  their  production.  Yes  ;  cer- 
tainly, if  A  has  occupation  all  the  time.  But  if  he  has  occu- 
pation for  only  four  days  out  of  six,  then  most  certainly 
let  him  do  something  else  during  the  two  unoccupied  days, 
rather  than  call  in  a  skilled  artist  to  do  it  for  him.     He  may 


REVIEW    OF   BASTIAT'S   SOPHISMS   OF   PROTECTION.  43 

not  do  it  as  well  or  easily  at  first,  but  he  will  do  it  after  a 
fashion,  and  better  and  better  every  time  he  tries ;  and  he 
will  save  a  portion  of  his  four  days'  earnings,  which  would 
otherwise  be  paid  out  for  the  work  he  now  does  for  himself. 
If  he  be  thrifty  he  will  do  this  of  liis  own  accord ;  if  he  be 
unthrifty  it  would  be  better  for  him,  so  far  as  opulence  is  con- 
cerned, if  he  were  constrained  to  do  so.  But  this  is  to  invade 
his  liberty.  True  ;  and  upon  other  grounds  than  that  of 
procuring  abundance,  it  may  be  better  not  to  constrain  him  ; 
but  that  is  another  question.  The  question  we  have  before 
us  is,  "  How  shall  he  obtain  the  greatest  abundance  ?  "  Tliere 
can  be  no  sound  reasoning  if  we  fly  off  from  the  point  under 
discussion. 

Now  let  us  consider  a  nation,  say,  the  United  States.  It 
possesses  a  decided  advantage  in  growing  cotton.  Are  we  to 
confine  ourselves,  fifty  millions  of  us,  to  growing  cotton  ?  It 
is  only  necessary  to  ask  the  question  to  make  the  absurdity 
apparent.  We  have  also  an  abundance  of  cheap  land,  capable 
of  yielding  agricultural  products  for  seven  hundred  millions 
of  people,  and  at  our  present  rate  of  increase  we  shall  grow  to 
be  a  hundred  millions  in  twenty-five  years ;  and  to  two  hun- 
dred millions  in  half  a  century.  Some  twenty-five  millions  of 
people  three  thousand  miles  away  are  willing  to  take  a  few 
agricultural  products  of  us,  and  they  say  they  will  give  us  in 
return  manufactured  products  cheaper  than  we  can  make 
them  ourselves,  while  land  is  open  to  all  at  a  nominal  price. 

Twenty-five  millions  of  people  (a  minute  portion  of  the 
human  race)  propose  to  do  the  mechanical  and  manufacturing 
work  for  a  thousand  millions.  But  a  thousand  millions  of 
people  can  raise  raw  agricultural  products  for  three  thousand 
millions  ;  where  are  the  other  two  thousand  millions?  Or,  to 
put  it  in  another  shape,  three  hundred  and  fifty  millions  can 
raise  raw  agricultural  products  for  the  world ;  what  are  the 
other  six  hundred  and  fifty  milHons  to  do  while  the  English 
Islands  do  all  the  mechanical  and  manufacturing  labors  ^ 
England  teaches  free-trade  doctrines,  and  these  promise  a 
greater  abundance  than  is  practicable  with  protection.  We 
have  a  right,  then,  to  assume  that  she  promises  the  world  at 


4-1  EEVIEW   OP  BASTIAT'S   SOPHISMS   OP  PROTECTION. 

least  as  great  an  abundance  of  mechanical  and  manufactured 
products  as  are  enjoyed  by  the  people  of  the  United  States 
who  are  so  silly  and  unscientific  as  to  help  themselves.  They 
consume  per  head  a  value  of  $100  in  such  products.  A  hun- 
dred dollars  each  for  one  thousand  millions  of  people  is  one 
hundred  thousand  millions.  The  remuneration  of  capital 
and  labor  for  converting  the  raw  material,  even  at  a  low 
rate,  would  be  thirty  thousand  millions  of  dollars,  or  about 
six  times  the  total  annual  production  and  consumption  of  the 
whole  British  Islands !  Here  we  come  to  an  absurdity.  The 
dream  of  being  the  workshop  to  the  world  enjoying  abun- 
dance is  seen  to  be  only  a  dream.  If  those  Islands  were 
called  upon  to  supply  the  United  States  alone,  profits  and 
wages  would  speedily  be  doubled  or  trebled  there,  and  the 
cheapness  which  exists  during  lack  of  demand  would  vanish. 
But  what  she  could  give  us  of  finished  products  would  be 
limited  by  the  amount  she  could  consume  of  our  raw  prod- 
ucts ;  and  a  very  short  calculation  will  show  that  the  quantity 
would  be  only  a  small  fraction  of  what  we  get  by  helping 
ourselves  even  now,  and  twice  as  inadequate  twenty-five 
years  hence. 

Any  one  who^has  been  taught  simple  arithmetic  can  see 
that  Great  Britain  cannot  give  us  abundance  at  any  price. 
She  can  give  us  cheapness  and  scarcity  if  we  will  first  allow 
her  to  destroy  our  own  industries  and  drive  an  undue 
proportion  of  us  on  to  farms ;  but  we  can  have  an  abundance 
of  finished  products  07ily  by  manufacturing  ourselves.  In 
this  way  we  can  have  all  we  need  without  paying  more  in 
labor  and  abstinence  than  we  pay  for  raw  products. 

Chapter  XIX., — "National  Independence." 

A  chapter  so  full  of  inveracity,  audacious  misrepresentation, 

and  declamation  as  to  be  positively  wonderful.     It  says  in 

substance  that :  — 

"  With  free  trade  and  mutual  independence  would  come  eternal 
peace !  '  Interest '  —  that  is,  the  immediate  selfish  interest  of  the 
unbridled  individual  —  is  the  necessary,  eternal,  and  indestructible 
mover  to  the  guidance  of  which  Providence  has  confided  human  per- 
fectibility.    The  'spoliators'  declaim  against  the  beautiful  harmony 


•       REVIEW   OF  BASTIAT's   SOPHISMS   OP   PROTECTION.  45 

which  God  has  been  pleased  to  establish  iu  the  moral  world,"  etc., 
usque  ad  nauseam. 

The  fact  is  that  the  most  wicked  wars  of  modern  times  have 
been  waged  to  promote  free  trade,  and  more  would  be  waged 
were  it  not  that  the  great  protectionist  powers  are  too  strong 
to  be  attacked. 

Chapter  XX.,  —  "  Human  Labor  —  National  Labor." 

M.  Bastiat  maintains  that  the  destruction  of  machinery  and 
the  prohibition  of  foreign  goods  are  two  acts  proceeding  from 
the  same  doctrine. 

This  only  proves  that  M.  Bastiat  was  entirely  ignorant  of 
political  economy.  He  takes  the  case  of  machinery  and  shows 
easily  enough  that  its  introduction  is  advantageous.  The 
gross  annual  product  is  not  diminished,  the  immediate  loss 
which  falls  upon  the  displaced  laborers  is  made  good  to  labor 
in  general  by  the  expenditure  of  the  sum  saved.  Thus  far, 
all  right ;  but  his  next  step  is  a  blunder. 

Ten  millions  of  hats  produced  in  France  at  fifteen  francs 
makes  one  hundred  and  fifty  millions  of  francs.  Import  from 
abroad  at  ten  francs,  and  they  will  cost  one  hundred  millions  ; 
and  the  fifty  millions  saved  being  spent  for  other  articles  or 
services,  M.  Bastiat  imagines  that  all  will  be  serene  the  same 
as  in  the  case  of  machinery.  But  he  overlooks  the  fact  that 
the  one  hundred  and  fifty  millions'  value  of  hats  provoked 
and  remunerated  other  French  labor,  producing  values  of  one 
hundred  and  fifty  millions  ;  the  sum  of  products,  then  (the 
whole  price  of  which  was  net  individual  income  to  French- 
men ;  see  J.  B.  Say),  was  three  hundred  millions.  Bring 
in  the  English  hats,  and  the  French  products  to  pay  for  the 
hats  (supposing  complete  reciprocity)  will  be  one  hundred 
millions.  If  the  fifty  millions  saved  on  the  hats  be  spent  for 
other  products,  or  say  for  more  hats,  then  the  gross  French 
product  will  be  one  hundred  and  fifty  millions.  France 
altogether  will  have  lost  one  hundred  and  fifty  millions.  The 
case  is  totally  unlike  that  of  machinery.  If  M.  Bastiat  had 
been  competent  to  instruct  the  American  people,  he  would 
not  have  made  such  a  blunder. 


46  REVIEW  OF   BASTIAT's   SOPHISMS   OF   PROTECTION. 

Chapter  XXI.  is  entitled  "  Raw  Material." 
Here  the  blunder  just  noticed  comes  on  the  stage  again. 
M.  Bastiat  quotes  M.  de  St.  Cricq  as  saying  :  — 

" '  Labor  constitutes  the  riches  of  a  nation,  because  it  creates  supplies 
for  the  gratification  of  our  necessities  ;  and  universal  comfort  consists 
in  the  abundance  of  those  supplies.' 

"  Here,"  says  M.  Bastiat,  "  we  have  the  principle. 

"  '  But  this  abundance  ought  to  be  the  result  of  national  labor.  If 
it  were  the  result  of  foreign  labor,  national  labor  must  receive  an 
inevitable  check.' 

"  Here,"  says  IVL  Bastiat,  "  lies  the  error.  (See  the  preceding 
fallacy.)" 

There  are  inaccuracies  of  expression  in  what  is  represented 
to  have  been  said  by  M.  de  St.  Cricq,  but  it  is  plain  enough 
what  he  means,  if  one  wishes  to  understand.  Labor  does 
not  constitute  the  riches  of  a  nation;  but  labor  produces  or 
causes  the  riches  of  a  nation,  because  it  creates  supplies  for  the 
gratification  of  our  necessities,  and  universal  comfort  consists 
in  the  abundance  of  those  supplies ;  and  the  labor  must  be 
national  labor.  It  cannot  by  any  possibility  be  foreign  labor, 
for  that  will  not  give  an  atom  of  its  products  except  in  ex- 
change for  an  atom  of  ours,  or  for  bonds  which  are  mortgages, 
or  for  treasure.  If  nation  A  produces  articles  with  less  labor 
than  nation  B,  and  nation  B  produces  other  articles  with  less 
labor  than  nation  A,  it  will  be  w^ell  for  them  to  exchange,  pro- 
vided the  gross  annual  product  of  each  nation  remains  undimin- 
ished. If  it  be  diminished  in  either  nation,  then  clearly  that 
nation  is  the  loser.  How  can  this  be  when  both  are  getting 
things  cheaper?  Because  the  articles  and  services  in  demand 
in  each  country  are  not  infinite  in  number,  but  limited  ;  nor 
are  they  in  infinite  demand  as  to  quantity,  but  also  in  limited 
demand.  Nation  A  produced  both  articles,  x  and  y,  enough 
for  its  demand  at  the  cost  price.  Nation  B  also  produced 
both  articles,  x  and  ?/,  enough  for  its  demand  at  the  cost  price. 
Nation  A  now  transfers  to  nation  B  the  industry  producing  z, 
and  nation  B  transfers  to  nation  A  the  industry  producing  y. 
The  aggregate  demand  for  products  and  services  in  general  is 
diminished  in  one  or  the  other  nation  unless  x  and  y  balance. 


REVIEW   OF   BASTIAT  S   SOPHISMS   OF   PROTECTION.  47 

If  the  demand  in  nation  A  for  B's  cheaper  product  ?/  be  1 
and  the  demand  in  nation  B  for  A's  cheaper  product  x  be  5, 
the  extra  4  can  only  be  had  by  nation  B  so  long  as  its  treas- 
ure and  securities  hold  out.^  Thereafter  it  must  be  content 
with  one  fifth  of  the  article  x  that  it  had  before,  and  this 
dej^lorable  result  will  be  arrived  at  by  an  appreciation  of  the 
valile  of  gold,  making  all  debts,  public  and  private,  more 
onerous,  and  reducing  the  exchangeable  value  of  its  whole 
accumulated  capital  in  the  market  of  the  world.  The  ac- 
cepted theory  of  international  exchange  leaves  out  of  sight 
three  not  altogether  insignificant  facts,  —  the  first,  the  fact  that 
there  is  such  a  thing  as  money  in  the  world ;  the  second,  that 
nations  can  and  do  run  in  debt  to  other  nations ;  the  third, 
that  the  debtor  nation  must  sell  its  products  for  what  the 
creditors  are  willing  to  give,  Bastiat  assumes  falsely  that,  if 
France  gives  up  making  hats  and  takes  them  from  England, 
then  England  will  increase  its  consumption  of  French  articles 
to  the  same  extent.  The  increase  in  the  English  field  of 
employment  consequent  upon  the  new  demand  for  hats  will 
give  England  a  greater  power  of  consumption  ;  but  this 
power  will  be  exerted  in  buying  more  of  everything  (com- 
modities and  services)  which  England  habitually  desires  and 
buys.  Only  a  small  portion  of  the  increased  consumption  will 
fall  upon  French  products;  the  balance  must  be  paid  in 
treasure.  If  this  be  recovered  from  other  nations  it  will  only 
be  by  offering  them  French  products  cheaper  than  before. 

Abundance  then  cannot  be  the  result  of  foreign  labor ;  the 
foreign  products  can  only  be  obtained  in  exchange  for  national 
products,  or  for  money  or  for  bonds,  that  is,  by  running  in 
debt ;  and  the  introduction  of  the  foreign  product,  even  at  a 
two-thirds  price,  may  lead  to  a  marked  impoverishment  of  one 
or  the  other  of  the  exchanging  nations.  One  or  the  other  may 
have  a  greater  power  of  purchase  at  the  high  price,  than  it 
has  at  the  lower  price. 

The  rest  of  the  chapter  is  a  conversation  between  manufac- 
turers who  wish  to  have  materials  introduced  duty  free,  and 
M.  de  St.  Cricq. 

Manufacturers  often  wish  their  own  individual  interests,  or 
supposed  interests,  to  be  made  the  concern  of  the  State ;  but 
^  See  note  3,  page  79. 


48  REVIEW    OF   BASTIAT's   SOPHISMS    OF    PROTECTION. 

no  protectionist,  properly  so  called,  considers  any  but  the 
problem  of  how  the  nation  may  become  wealthier,  wiser, 
and  better.  It  is  unnecessary  to  examine  what  M.  Bastiat 
puts  into  the  mouths  of  the  manufacturers  any  more  than  his 
declamations  about  spoliation.  These  last  are  the  arts  of  the 
sophist,  essentially  dishonest  and  disreputable,  and  discredit- 
able alike  to  the  author  and  to  those  who  have  made  them- 
selves his  sponsors  to  the  American  public.  Nobody  supposes 
or  affirms  that  labor  itself,  aside  from  its  products,  is  the 
desirable  object,  so  far  as  direct  effects  upon  opulence  are 
concerned  ;  and  in  combating  such  a  proposition,  M.  Bastiat 
simply  makes  a  false  issue. 

Chapter  XXII.  is  entitled  "  Metaphors." 

In  this  chapter,  M.  Bastiat  inveighs  against  the  use  of  the 
expressions :  invasion  of  foreign  products ;  an  inundation 
of  foreign  goods ;  j)aying  tribute  to  a  foreign  nation.  He  is 
quite  right  to  inveigh  against  their  use  as  arguments.  They 
are  not  arguments.  Neither  is  the  denunciation  of  their  use 
an  argument.  If  the  free-trade  doctrine  be  right,  they  are 
improperly  used,  not  being  descriptive  of  facts  ;  if  the  protec- 
tionist doctrine  be  right,  they  are  oftentimes  very  descriptive 
of  most  calamitous  facts.  Which  is  right  and  which  is  wrong 
can  never  be  ascertained  by  declamation  and  much  calling  of 
names. 

CONCLUSION". 

M.  Bastiat  says  of  his  book  :  — 

"  Among  the  sophisms  which  it  has  discussed,  each  has  undoubtedly 
its  own  formula  and  tendency,  but  all  have  a  common  root ;  and  this 
is  the  forgetfulness  of  the  interests  of  men,  considered  as  consumers" 

M.  Bastiat  imagines  that  the  interest  of  the  consumer  is 
promoted  by  offering  him  commodities  at  a  low  price,  regard- 
less of  whether  he  has  or  has  not  anything  to  buy  with. 
The  protectionist  maintains  that  the  interest  of  the  consumer 
is  best  promoted  by  not  only  offering  him  commodities,  but 
seeing  to  it  that  he  has  the  means  of  purchasing.  If  he  can- 
not buy,  it  is  mere  trifling  to  offer  him  an  article  for  little 


REVIEW   OF   BASTIAT's    SOPHISMS   OF   PROTECTION.  49 

money.  Give  liiiii  the  means  of  purchase,  and  the  price  is 
comparatively  unimportant.  Scarcity  to  the  consumer  is  often 
accompanied  by  lowuess  of  price ;  while  abundance  goes 
often  hand  in  hand  with  a  high  price.  M.  Bastiat  concludes 
that  he  will  be  satisfied  if  he  has  brought  the  reader  to 
doubt  — 

"  1.   The  blessings  of  scarcity. 

"  2.   The  beneficial  effects  of  obstacles. 

"  3.   The  desirableness  of  effort  without  result. 

"  4.  The  inequality  of  two  equal  values  when  one  comes  from  the 
plough  and  the  other  from  the  workshop. 

"  5.  The  incompatibility  of  prosperity  with  justice,  and  of  peace  with 
liberty,  and  of  the  extension  of  labor  with  the  advance  of  intelligence  ! " 

The  protectionist  believes  that  in  the  existing  state  of  the 
world  abundance  cannot  flow  from  free  trade  ;  that  to  acquire 
abundance  a  nation  must  erect  an  obstacle  to  the  maliciously 
destructive  competition  of  a  community,  which,  having  re- 
duced its  own  labor  to  misery,  can  and  will,  if  permitted, 
bring  others  down  to  its  level.  Protection  does  not  maintain 
that  effort  without  result  is  desirable,  but  only  that  it  is 
desirable  to  enlarge  the  field  in  which  effort  is  possible,  so  far 
at  least  as  to  obtain  the  greatest  possible  gross  annual  product 
for  the  nation.  Protection  has  nothing  to  do  with  the  prop- 
osition that  any  two  equal  values  are  unequal,  nor  with  any 
other  absurdity  ;  and,  finally,  protection  maintains  that  under 
its  system,  and  only  under  its  system,  will  prosperity  and 
justice,  peace  and  liberty,  labor  and  intelligence,  be  found  in 
accord. 

To  be  sure,  there  is  a  difference  in  the  meaning  assigned  to 
justice  and  liberty  by  M.  Bastiat  and  by  the  protectionist. 
The  latter  considers  it  just  that  the  individual,  who  prospers 
with  and  through  the  prosperity  of  the  society,  should  be 
allowed  to  follow  that  private  selfishness,  which,  if  followed 
by  all,  would  destroy  the  prosperity  of  all,  and  wliich  would 
cease  to  be  advantageous  to  tlie  individual  himself  the  moment 
others  followed  his  example  ;  but  the  protectionist  under- 
stands by  liberty,  the  liberty  of  the  whole  community  to 

7 


50  REVIEW    OF   BASTIAT's   SOPHISMS   OF  PROTECTION. 

pursue  the  course  most  advantageous  to  the  Tvhole  communitj, 
the  individual  inchided ;  it  does  not  understand  by  libSrty 
the  right  of  one  man  to  veto  and  prevent  the  efforts  of  the 
whole  for  the  good  of  the  whole,  the  individual  himself  in- 
cluded. We  have  conquered  state  rights  when  construed  to 
include  nullification ;  we  are  not  likely  then  to  allow  individ- 
ual rights  to  be  pressed  to  the  same  extreme, 

M.  Bastiat  concludes  by  charging  upon  protectionists  spolia- 
tion and  robbery,  which  is  rather  cool  in  face  of  the  facts. 
Great  Britain,  at  the  instance  of  her  manufacturing  classes, 
has  found  them  markets  by  force  wherever  she  could,  —  not- 
ably, in  China,  India,  Japan,  and  Ireland.  She  now  is  attempt- 
ing the  same  thing  by  sophism  in  France,  the  United  States, 
and  her  colonies.  She  cannot  use  force  in  the  latter  cases  ; 
but  she  can  scatter  the  specious  fallacies  of  such  writers  as 
Bastiat,  and  this  she  is  doing  with  a  free  hand. 

Part  IL  Chapter  I.  is  entitled  "  Natural  History  of 
Spoliation." 

In  this  chapter  the  evils  of  war,  robbery,  slavery,  and  mo- 
nopoly are  enlarged  upon,  and  the  protectionist  policy  is  tlieu 
quietly  classed  with  the  rest  as  being  monopoly.  This,  too, 
addressed  to  thirty  millions  of  Frenchmen  ;  and,  now,  ad- 
dressed to  fifty  millions  of  Americans,  every  one  of  whom  is 
free  to  go  into  any  of  the  trades  or  manufactures  enjoying 
the  monopoly.     Good  rhetoric,  only  untruthful  and  deceitful. 

Chapter  II.,  —  "  Two  Systems  of  Morals." 

This  chapter  explains  that  economical  morality  (that  is, 
free  trade)  does  not  exclude  religious  morality,  which  may 
still  find  something  to  do  in  the  world  !  This  is  fortunate 
for  religious  morality  ! 

Chapter  III.,  —  "  The  Two  Hatchets." 

This  is  the  same  wearisome  untruth  once  more  :  a  car- 
penter is  represented  as  holding  forth  that  by  means  of  the 
protective  laws  he  is  robbed  of  half  his  earnings,  and  so  he 
asks  for  a  law  that  only  dull  hatchets  be  used  so  that  the 


REVIEW   OF  BASTIAT'S   SOPHISMS   OP  PROTECTION.  51 

amount  of  carpenters'  work  should  be  doubled.  In  sucli 
mixed  fabrics  of  exaggeration  and  absurdity,  M.  Bastiat  stands 
easily  first.  Nobody  proposes  any  sort  of  protection  which 
will  diminish  the  efficiency  of  labor,  or  which  will  other  than 
augment  the  national  gross  annual  product.  Nobody  believes 
that  half  of  a  French  carpenter's  wages  are  taken  away  by 
protection ;  although  it  is  very  possible  and  probable  that 
free  trade  would  diminish  them  one  half. 

Chapter  IV.,  —  "  Inferior  Council  of  Labor." 

Here  laborers,  blacksmiths,  and  carpenters  are  represented 
as  declaring  that  they  pay  more  for  bread,  meat,  sugar,  thread, 
etc.,  on  account  of  the  tariff. 

They  would  like  to  get  their  bread  and  meat,  their  sugar 
and  thread,  everything  they  eat,  drink,  clothe,  or  warm  them- 
selves with,  from  foreign  countries  ;  and  suppose  that,  under 
such  circumstances,  there  would  be  abundant  French  cus- 
tomers for  tailors  and  blacksmiths. 

The  unmeasured  and  incredible  audacity  of  M.  Bastiat 
makes  any  sober  answer  difiScult. 

He  pretends  to  believe  that  all  laborers  having  carefully 
considered  their  position  might  rationally  come  to  the  con- 
clusion that  they  found  relevancy  in  the  proposition  that 
"  It  is  better  to  support  one's  self,  surrounded  by  well-to-do 
neighbors,  than  to  be  protected  in  the  midst  of  poverty." 
He  feigns  to  believe  that  well-to-do  neighbors  will  be  gen- 
erated by  a  system  which  proposes  to  an  idle  population  to 
buy  everything  where  it  is  cheapest.  Buy !  What  is  a  man 
to  buy  with  who  has  nothing  to  do  ?  He  fancied  that  the 
amount  of  labor  employed  depended  upon  capital.  He  did 
not  know  that  quite  another  cause  mastered  or  limited  first 
the  accumulation  of  capital  and  then  the  employment  of 
laborers.  What  other  cause?  The  extent  of  the  field  of 
mutually  satisfying  desires.  The  community  as  a  whole  offers 
to  the  community  as  a  whole  —  wheat.  There  are  individ- 
uals who  desire  more  wheat  than  they  use  ;  but  they  have  not 
the  means  of  buying  it.  Why?  Because  they  produce  noth- 
ing the  community  desires  in  exchange  for  wheat.     Let  these 


52  REVIEW   OF   BASTIAT's   SOPHISMS   OF   PROTECTION. 

wishers  for  wheat  discover  a  new  convenience,  or  a  new  ser- 
vice for  which  others  have  a  desire,  and  the  satisfaction  of  the 
new  desire  will  give  wheat  to  those  wlio  before  were  sighing 
in  vain  for  it.  More  still ;  the  sale  of  an  additional  quantity 
of  wheat  will  enable  the  grower  of  wheat  to  satisfy  perhaps 
some  before  unsatisfied  desire.  The  newly  discovered  or 
invented  want  is  seized  upon  by  labor  and  by  capital  (both  of 
which  are  normally  in  excess  in  a  community  where  diver- 
sified employments  exist),  and  the  field  of  employment  is 
permanently  enlarged.  The  community  as  a  whole  produces 
more  than  before,  and  so  there  is  more  to  divide.  Wages, 
jjrofits,  rents,  all  rise  together.  Not  so  when  the  people,  seduced 
by  witless  manipulators  of  words,  adopt  the  free-trade  pana- 
cea. "  Let  us  buy  in  the  cheapest  market,"  say  they.  "  Let 
us  get  our  cotton  and  metal  fabrics  from  England,  our  woollen 
goods  from  Germany,  our  coal  from  Nova  Scotia,  our  sugar 
from  the  West  Indies,  our  hemp  and  tallow  from  Russia,  our 
lumber  from  Canada,  our  wool  from  Australia,"  Here  are 
industries  which  respond  to  what  now  (1881)  amount  to,  say, 
over  twelve  hundred  millions  of  dollars  of  annual  wants  in 
the  United  States,  the  satisfaction  of  which  supports  a  pop- 
ulation whose  demand  for  the  productions  of  other  industries 
creates  a  market  to  an  equal  amount. 

Transferring  these  industries  to  foreign  nations  would  re- 
duce the  purchasing  power  of  the  United  States  by  twelve 
hundred  millions  of  dollars,  would  diminish  the  gross  annual 
product,  the  fund  out  of  which  all  icages,  all  profits,  all  rents 
are  paid  by  that  amount,  which  means  by  one  sixth  part. 
But  this  is  not  the  worst.  The  foreign  markets,  oppressed  with 
an  additional  twelve  hundred  millions  of  our  products,  would 
refuse  them,  except  at  a  greatly  reduced  price,  and  we  should 
find  that  many  of  the  remaining  unscalped  industries  would 
gradually  die  out  for  want  of  a  market.  The  over-anxious 
manufacturer,  clutching  after  a  foreign  market,  would  find 
himself  bereft  of  a  market  ten  times  greater  at  home  ;  the 
clergyman,  lawyer,  physician,  who  coveted  cheaj)  clothes  with 
ample  incomes,  would  find  the  people  too  poor  to  pay  the  ample 
incomes.    The  carpenter,  blacksmith,  mason,  painter,  paperer, 


REVIEW  OF   BASTIAT's   SOPHISMS  OP   PROTECTION.  53 

etc.,  who  had  been  told  that  "  houses  were  never  imported," 
would  find  out,  to  their  cost,  that  houses  were  built  in  propor- 
tion- to  the  means  of  the  community.  The  owner  of  railroad 
stock,  bank  stock,  manufacturing  stock,  of  houses,  of  stores, 
of  forges,  of  farms,  would  find  out  at  last  that  they  were  in 
the  same  boat  as  the  day  laborer,  and  that  they  could  not 
thrive  while  he  starved. 

Chapter  V.,  —  "  Dearness  —  Cheapness." 

Here  is  only  a  repetition  of  the  old  fallacy  which  teaches 
an  individual  who  has  work  for  only  four  days  out  of  six, 
that  he  will  become  rich  faster  by  spending  a  portion  of  his 
four  days'  earnings  to  buy  than  he  will  by  keeping  all  his 
earnings  and  doing  for  himself  during  the  unemployed  two 
days  that  which  he  requires  to  have  done  ;  and  which  teaches 
a  nation  that  it  will  become  rich  by  buying  at  a  cheap  price 
what  its  unemploj^ed  labor  and  capital  can  make  for  nothing. 
Here  also,  is  a  repetition  of  inveracious  assumption,  as  fol- 
lows: — 

"  Therefore  the  question,  the  eternal  question,  is  not  whether  protec- 
tion favors  this  or  that  special  branch  of  industry,  but  whether,  all  things 
considered,  restriction  is,  in  its  nature,  more  profitable  than  freedom. 

'■^■Now  no  person  can  maintain  that  proposition.  And  just  this 
exphiins  the  admission  which  our  opponents  continually  make  to  us  : 
*ToM  are  right.,  on  principle.'  " 

As  before  observed,  some  protectionists,  feeling  themselves 
unable  to  unravel  all  the  innumerable  Protean,  "  Achilles  and 
Tortoise  "  puzzles  which  men  like  Bastiat  propound,  may  have 
found  refuge  in  the  absurdity  of  saying,  "  So  and  so  may 
be  good  in  theory,  but  is  not  good  in  practice  ;  "  but  it  is  not 
the  refuge  of  any  protectionist  who  has  the  time  and  patience 
to  follow  up  and  refute  a  hundred  times  over  the  parroted 
fallacies  of  free  trade. 
•  There  is  nothing  new  in  Chapter  V.  It  is  only  a  repetition 
of  positions  and  assumptions  alreadj'  over  and  over  again 
refuted. 

Chapter  VI.,  —  "  To  Artisans  and  Laborers." 

Here  is  more  repetition.     Tariff  duties  are  a  tax,  therefore 


54         REVIEW  of'bastiat's  sophisms  of  protection. 

they  are  of  the  same  nature  as  all  other  taxes.     This  is  like 
the  syllogism  with  four  terms  which  runs  thus  :  — 

Files  are  instruments  made  of  steel. 

A  regiment  marching  in  regular  order  is  composed  of  files. 
Therefore  a  regiment  marching  in  regular  order  is   com- 
posed of  instruments  made  of  steel. 

Some  taxes  take  money  from  the  people  and  give  nothing 
in  return. 

Tariff  duties  are  taxes. 

Therefore  tariff  duties  take  money  from  the  people  and 
give  nothing  in  return. 

Such  is  free-trade  logic!  Professors  who  write  books  upon 
political  economy  would  do  well  to  have  their  manuscripts 
examined  by  their  fellow-professors  who  teach  the  science  of 
logic,  before  they  stereotype  their  productions. 

Again  M.  Bastiat  says  :  — 

"  I  believe  that  we  can  call  that  the  natural  rate  of  wages  which 
would  establish  itself  naturally,  if  there  were  freedom  of  trade.  Then, 
when  they  tell  you  that  restriction  is  for  your  benefit,  it  is  as  if  they 
told  you  that  it  added  a  surplus  to  your  natural  wages.  Now,  an 
extra  natural  surplus  of  wages  must  be  taken  from  somewhere  :  it  does 
not  fall  from  the  moon  ;  it  must  be  taken  from  those  who  pay  it. 

"  You  are  then  brought  to  this  conclusion,  that,  according  to  your 
pretended  friends,  the  protective  system  has  been  created  and  brought 
into  the  world  in  order  that  capitalists  might  be  sacrificed  to  laborers. 

"  Tell  me,  is  that  probable  ?  " 

That  is  to  say,  M.  Bastiat,  whose  work  has  been  translated 
from  the  French  by  the  Free  Trade  League  in  order  "to 
educate  public  opinion  ;  to  convince  the  people  of  the  United 
States  of  the  folly  and  wrongfulness  of  the  protective  system," 
—  this  M.  Bastiat  did  not  know  that  a  fully  occupied  people 
and  capital  would  produce  a  greater  mass  of  commodities 
than  they  would  produce  if  a  third  or  a  half  of  them  were 
unemployed.  He  did  not  know  that  a  large  annual  product 
gave  much  to  be  divided  between  wages,  profits,  and  rent ; 
and  he  did  not  know  that  the  portions  falling  to  profits  and 


REVIEW   OF    BASTIAT  S   SOPHISMS   OF   PROTECTION.  55 

rent  were  nearly  all  distributed  again  to  labor.  He  did  not 
know  that  not  only  the  recipients  of  profits  and  rent,  but 
still  more  the  recipients  of  wages,  were  supremely  interested 
that  the  gross  annual  product  should  be  the  greatest  possible, 
and  that  this  desirable  result  was  not  to  be  obtained  by  sitting 
idle  and  buying  cheap  goods  of  other  nations. 

But  in  spite  of  this  ignorance,  M.  Bastiat  was  selected  as 
the  best  teacher  of  political  economy  which  the  League 
could  find  for  the  people  of  the  United  States. 

One  can  imagine  the  grim  humor  with  which  the  clear- 
headed workmen  of  the  United  States  no  doubt  contemplate 
the  condescension  of  the  Leaq:ue. 

Chapter  VII.,  — "  A  Chinese  Story." 

This  is  the  obstacle  fallacy  over  again. 

The  free-traders  discovered  that  obstacles,  many  of  them, 
were  the  cause  of  expense,  or  that  their  existence  increased 
the  cost  of  commodities,  without  in  any  way  increasing  the 
gross  product,  or  means  of  payment.  They  then  discovered 
that  a  duty  upon  imported  articles  increased— -sometimes  — 
the  price  of  similar  articles  produced  in  the  country.  We  say 
sometimes,  for  Bastiat  himself  admits  that  they  do  not  always 
do  so  ;  and  the  fact  is  notorious  that  they  do  not  do  so  for  any 
considerable  length  of  time,  to  nearly  the  amount  of  the  duty, 
and  that  they  often,  by  stimulating  home  skill  and  competi- 
tion, cause  a  lower  price  than  existed  before.  Never  mind  ! 
the}''  are  an  obstacle  to  importation,  so  they  are  obstacles  ;  and 
by  simply  calling  them  obstacles,  pure  and  simple,  it  is  made 
to  appear  that  they  are  not  only  obstacles  to  importation,  Init 
also  obstacles  to  opulence.  They  are  obstacles  ;  so  also  are  fens, 
mountains,  stormy  seas,  distance,  obstructed  canals,  bad  tools, 
etc.,  etc.  The  last  being  seen  to  be  really  obstacles  to  opulence, 
the  free-traders  jump  you  to  the  conclusion  that  everything 
called  an  obstacle  is  an  obstacle  to  opulence.  Several  phe- 
nomena called  obstacles  being  seen  to  be  really  obstacles  to 
opulence,  inasmuch  as  they  raise  the  price  without  augment- 
ing the  national  product,  everything  called  by  the  same  name 
is  inferred  to  be  of  the  same  effect.     TJiose  obstacles  increase 


56     .    REVIEW  OP  bastiat's  sophisms  of  protection. 

the  cost  in  labor,  say,  25  per  cent ;  this  obstacle  —  the  duty  — 
also  (we  will  suppose  for  the  sake  of  argument),  raises  the 
cost  in  labor  25  per  cent.  They  are,  then,  exactly  alike  ! 
and  so  they  are,  thus  far,  or  rather  in  these  particulars ;  but 
in  the  important  particular  they  are  exactly  opposite.  Those 
obstacles  increase  the  cost  in  labor  of  everything,  —  of  that 
■which  it  is  desirable  to  import  as  well  as  of  that  which  it  is 
not  desirable  to  import.  This  obstacle  does  not  lay  a  finger 
upon  the  importation  of  tropical  products  which  our  climate 
cannot  produce,  does  not  prevent  or  render  more  difficult 
immigration,  travel,  the  personal  inspection  of  foreign  arts 
and  sciences  and  social  organization  ;  but  it  does  prevent  that 
industrial  competition  which  makes  it  impossible  for  us  to 
acquire  such  arts  as  we  are  perfectly  able  to  acquire,  and 
which  both  during  the  process  of  acquisition  and  thenceforth, 
forever,  will  add  to  the  gross  annual  product  of  the  nation, 
which  is  the  same  thing  precisely  as  the  aggregate  net  indi- 
vidual income. 

This  obstacle  also  discriminates  and  shuts  out  those  prod- 
ucts in  which  foreign  nations  excel  only  by  reason  of  the 
lower  rate  of  wages  and  by  the  introduction  of  which  our 
own  existing  system  of  civilization  (based  as  it  is,  upon  a 
high  scale  of  remuneration  to  labor  of  every  sor-t}  would  be  im- 
paired if  not  entirely  overthrown.  The  duty  is  a  discriminating 
obstacle  in  which  all  that  is  good  in  the  natural  obstacles 
is  retained,  and  all  that  is  bad  is  discarded  ;  this  opposes 
baneful  intercourse ;  those  oppose  alike  every  kind  of  inter- 
course, the  benignant  as  well  and  as  much  as  the  baneful;  this 
is  an  obstacle  reared  by  human  intelligence  for  a  definite 
purpose  ;  those  are  oV)stacles  arising  out  of  the  constitution 
of  the  world.  A  mind  may  be  presumed  to  have  been 
given  to  man  to  enable  him  to  discriminate  between  dif- 
ferent things,  even  when  called  by  the  same  name.  Even 
a  free-trader  can  perceive  that  there  is  a  difference  between 
a  file  of  soldiers  and  a  file  of  a  carpenter ;  by  and  by  perhaps 
they  may  develop  sufficiently  to  see  that  there  is  a  difference 
between  a  tax  which  simply  takes  a  dollar,  and  a  tax  which, 
where  it  takes  a  dollar,  gives  five ;  and  they  may  grow  to 


EEVIEW   OF  BASTIAT's   SOPHISMS   OF  PROTECTION.  57 

see  that  there  is  a  difference  between  an  obstacle  which 
simply  obstructs  and  an  obstacle  which  overcomes  and  annihi- 
lates a  far  greater  obstruction. 

Chapter  VIII., —  '•'■  Post  hoc^  ergo  propter  lioc^ 

The  free-traders  say,  "  See  how  prosperous  England  has 
been  since  she  adopted  free  trade  !  "  They  exaggerate  every 
picture  of  her  wealth,  wink  out  of  sight  the  panics  of  1866 
and  1873,  with  their  attendant  horrors,  point  to  the  indus- 
trial troubles  in  the  United  States  in  1873-1879,  but  say 
nothing  about  the  sufficient  cause  of  a  contraction  in  the 
currency,  the  like  of  which  worked  far  greater  mischief  in 
1819  in  England  ;  say  nothing,  either,  of  the  wonderful  re- 
covery of  the  United  States  under  a  Jdgher  tariff  in  1879-80; 
say  nothing  about  the  prosperity  of  France  since  1845,  —  far 
more  astonishing  than  that  of  England.  They  say  nothing 
about  the  advantages  that  England  has  derived  from  invest- 
ments in  protectionist  countries.     No  ! 

England  adopted  free  trade. 

Post  hoc,  England  showed  some  very  decided  evidences  oi 
prosperity.  Ergo,  the  prosperity,  such  as  it  was,  came  from 
free  trade. 

Chapter  IX., —  "  Robbery  by  Bounties." 

Here  we  have  the  public  duped ;  the  public  robbed,  — 
robbed  by  tariff,  robbed  by  bounties,  robbed  by  fraud,  robbed 
by  force,  etc.  In  fact,  the  chapter  may  be  called  a  war-dance  to 
the  tunes  of  robbing,  cheating,  pillaging,  stealing,  swindling, 
monopoly,  etc.  Those  who  mistake  abuse  for  syllogism  can 
read  it,  no  doubt,  with  amusement.  There  are,  moreover,  two 
really  funny  things  in  it.  One  where  M.  Bastiat  says:  "They 
find  my  little  book  of  Sophisms  too  theoretical,  scientific, 
and  metaphysical !  "  The  other  is  where  he  says :  "  More 
than  sixty  years  ago  Adam  Smith  said,  '  When  manufac- 
turers meet  it  may  be  expected  that  a  conspiracy  will  bo 
planned  against  the  pockets  of  the  public'  " 

Did  M.  Bastiat  suppose  the  world  was  ignorant  of  the  fact 
that  the  free-trade  measures  adopted  in  Great  Britain  were 

8. 


58         REVIEW  OP  bastiat's  sophisms  of  protection. 

adopted  at  the  suggestion  of  a  cabal  of  manufacturers ;  that 
they  were  designed  to  forward  the  interests  of  that  class  at 
the  expense  of  the  landed  aristocracy  and  the  people  alike, 
and  that  they  were  forced  through  by  the  most  lavish  use 
of  money  to  promote  publications,  meetings,  addresses,  dis- 
tribution of  pamphlets,  etc.,  etc.,  and  that  they  prolonged  the 
sacrifice  of  India,  Ireland,  and,  for  a  time,  the  colonies,  to 
Manchester  ? 

The  same  system  is  now  being  applied  to  the  United  States. 
Pamphlets  and  books  are  being  distributed  by  the  myriad, 
and  these  wily  manufacturers  of  Manchester,  etc.,  would  per- 
suade us  that  they  are  taking  all  this  trouble  and  going  to 
all  this  expense  to  free  us  from  American  monopolists  !  If 
there  be  an  irrepressible  contest  between  American  monopo- 
lists and  English'  monopolists,  and  if  (as  Adam  Smith  and 
Bastiat  would  have  us  believe)  they  are  all  rascals,  then  the 
American  people  are  very  likely  to  rally  to  the  support  of 
their  own  rascals.  These  at  least  can  be  reached  by  the  law 
and  by  competition  ;  and  whatever  they  do  make  must  at  all 
events  be  either  spent  or  invested  in  the  United  States, 
and,  in  either  case,  gets  at  last  into  the  hands  of  those  who 
work. 

Chapter  X.,—  "  The  Tax  Collector." 

The  tax  collector  takes  six  out  of  twenty  hogsheads  of 
wine,  which  Jacques  Bonhomme,  wine  grower,  has  produced 
with  much  care  and  sweat. 

The  first  goes  to  the  creditors  of  the  state,  the  second  goes 
to  the  civil  service,  two  go  to  the  army  and  navy,  the  fifth 
goes  to  Algeria,  the  sixth  goes  in  bounty  to  encourage  man- 
ufactures. There  are  fourteen  hogsheads  left,  and  Jacques 
Bonhomme  is  assured  that  these  will  buy  only  half  as  much 
as  they  would  if  he,  good  man,  could  be  allowed  to  buy 
everything  from  the  foreigner.  There  is  the  same  confusion 
about  taxes  which  do,  and  those  which  do  not,  lead  to  an 
increase  of  the  nation's  annual  product,  which  we  have  before 
noticed,  and  the  same  exaggeration  wdiich  runs  through  the 
whole  book.    English  iron  is  cheap  M'hen  it  is  not  in  demand. 


REVIEW   OF  BASTIAT'S   SOPHISMS   OF  PROTECTIOxV.  59 

M.  Bastiat  assumes  that  it  will  be  just  as  cheap  when  France 
and  the  United  States  and  all  the  rest  of  the  world  are 
clamoring  for  it.  The  wine  grower  is  advised  to  buy  every- 
thing abroad  which  can  be  made  cheaper  there,  but  he  is  not 
told  that  there  would  soon  under  such  a  rcyhve  be  few  able 
to  buy  his  wine. 

Chapter  XL,  —  "  Utopian  Ideas." 

This  chapter  is  based  upon  the  assumption  that  the  just  and 
the  useful  must  agree.  Very  likely  they  must ;  but  never- 
theless it  may  be  that  the  author  has  a  mistaken  idea  of 
what  is  just  and  an  equally  mistaken  idea  of  what  is  useful. 
He  assumes  that  an  individual  has  an  undoubted  right  to  do 
whatever  he  pleases  with  that  which  he  acquires  in  the  com- 
munity. It  is  just,  according  to  M.  Bastiat,  for  him  to  benefit 
by  the  advantages  growing  out  of  the  association,  but  at  the 
same  time  to  refuse  to  act  in  that  manner  which  the  association 
finds  to  be  essential  to  the  interests  of  all,  himself  included. 
It  is  just  not  only  because  a  man  has  a  right  to  do  what  he 
pleases  with  his  own,  but  also  because  by  the  providence  of 
God  this  world  has  been  so  arranged  that  the  blind  instincts 
of  every  uninstructed  individual,  seeking  only  his  own  advan- 
tage, necessarily  lead  him  to  the  very  acts  which  best  pro- 
mote the  interests  of  the  whole  community.  The  individual 
instinct  of  every  man,  however  ignorant,  selfish,  and  gross,  is 
surer  than  the  judgment  and  reason  of  all  men,  including  all 
statesmen  and  philosophers. 

This  is  an  extraordinary  proposition  indeed.  It  is  not  self- 
evident.  It  must  then  have  been  arrived  at  by  induction,  or 
deduction,  or  both  ;  and  in  point  of  fact  we  find  that  it  was 
first  put  forth  by  Adam  Smith  in  the  second  chapter  of  the 
fourth  book  of  the  "  Enquiry  into  the  Nature  and  Causes  of 
the  Wealth  of  Nations."  He  thought  that  men,  in  some  cases, 
when  pursuing  their  own  interests,  did  at  the  same  time  pro- 
mote the  interest  of  the  nation.  The  cases  he  adduced  were 
very  uncertain,  it  being  by  no  means  sure  that  men  would  act 
as  he  imagined  ;  by  no  means  certain  that  among  the  manifold 
motives  of  man,  Adam   Smith  did  really  select  those  which 


60  REVIEW  OP  BASTIAT's  SOPHISMS   OF   PROTECTION. 

would  prevail  in  the  cases  imagined.  But  never  miud  ;  they 
suited  his  purpose,  and  he  jumped  his  readers  to  the  con- 
clusion that  in  "these  as  in  many  cases  the  individuals  were 
led  by  an  invisible  hand  to  promote  an  end  which  was  no  part 
of  their  intention."  It  will  be  observed  that  with  Adam  Smith 
this  was  little  more  than  a  pretty  piece  of  rhetoric ;  and  in 
other  parts  of  his  work  he  affirms  most  -vehemently  that  the 
private  interests  of  large  classes  are  adverse  to  the  interests 
of  the  community  as  a  whole  ;  but  a  prett}^  piece  of  rhetoric 
is  as  good  as  the  strongest  syllogism  to  the  man  who  was  not 
born  with  the  ability  to  reason,  and  has  never  acquired  the 
ability  through  education.  Everybody  who  knows  the  can- 
ons of  inductive  logic  is  aware  that  a  single  negative  instance 
absolutely  forbids  the  forming  of  such  a  "  general  proposition  ; " 
and  everj^body  who  has  read  enough  of  political  economy  to 
warrant  writing  upon  the  subject,  knows  that  the  negative 
instances  with  respect  to  this  proposition  are  innumerable. 
The  proposition  belongs  to  the  domain  of  noodledom,  — 

*'  A  limbo  large  and  broad,  since  called 
The  Paradise  of  Fools."  Milton. 

And  yet  such  is  the  looseness  with  which  political  economy 
is  treated  that  writers  of  some  authority  refer  to  it  as  if  it 
actually  carried  weight  into  the  discussions  upon  free  trade 
and  protection.  If,  then,  M.  Bastiat  is  in  error  as  to  what  is 
useful,  he  may  be  equally  in  error  as  to  what  is  just ;  and  it 
may  turn  out  that  justice  and  utility  do  agree  and  go  hand 
in  hand ;  only  they  are  not  what  he  calls  justice  and  utility, 
but  something  very  different. 

Chapter  XIII.,—  "  The  Three  Aldermen." 

This  is  a  delightful  piece  of  persiflage.  The  introduction 
into  Paris  of  three  industries  totally  unsuited  to  the  place  is 
descril)ed,  and  to  this  absurd  imagining  are  applied  the  argu- 
ments which  are  justly  and  properly  used  in  favor  of  the 
introduction  into  a  nation  of  industries  for  which  it  has 
every  natural  advantage,  and  in  favor  of  maintaining  them  so 
long  as  their  products  will  in  the  end  cost  less  (in  labor  and 
abstinence)  than  similar  products  brought  from  abroad.    This 


REVIEW   OF   BASTIAT's   SOPHISMS   OF   PROTECTION.  Gl 

is  the  case  of  the  United  States  v.  Great  Britain,  and  it  is  as 
an  argument  applicable  to  this  case  that  the  "  Sophisms  "  of 
Bastiat  are  presented  to  the  people  of  the  United  States. 

An  individual  becomes  wealthy  by  acquiring  from  others 
a  portion  of  the  already  existing  instruments  of  production. 
He  may  acquire  enough  to  support  him  a  thousand  years.  A 
nation  can  do  nothing  of  the  kind.  It  becomes  wealthy  in 
proportion  to  the  increase  of  its  annual  product  of  commod- 
ities. But  its  annual  product  must  be  annually  consumed, 
even  that  portion  of  it  which  is  saved ;  that  is  to  say,  the 
portion  which  is  converted  by  labor  into  instruments  to  facil- 
itate and  enlarge  future  production  and  comfort.  It  must  be 
consumed,  or  else  it  lies  in  immoderate  stocks,  paralyzing 
industry.  Taking  the  average  of  years,  it  is  consumed.  The 
richest  nation  then  is  the  one  which  first  produces  and  then 
consumes  the  largest  annual  product  of  commodities;  and 
here  we  stumble  headlong  upon  a  most  vital  proposition, 
which  is,  that  the  richest  nation  is  that  in  which  the  great 
bulk  of  the  people,  the  workers  with  hands  and  the  workers 
with  brains,  enjoy  the  highest  real  wages. ^ 

What,  then,  can  come  of  the  plans  which  are  built  upon 
a  reduction  of  the  real  wages  of  a  people  ?  Inevitable 
national  impoverishment.  The  gross  annual  j^'^'oduct  pays 
all  wages,  all  profits,  all  rents.  Increase  it,  —  they  all  in- 
crease.    Diminish  it,  and  they  all  dwindle  away  together. 

Chapter  XIV.,  —  "  Something  Else." 

Here  are  twelve  pages  of  puerilities  whicli  are,  nevertheless, 
specious,  and  must  be  dealt  with,  even  at  the  risk  of  weary- 
ing the  reader. 

"  Restriction  and  prohibition,"  says  M.  Eastiat,  "  bear  the  same 
relation  to  one  another  that  an  arc  bears  to  a  circle.  One  cannot  he 
bad  and  tlie  other  good,  any  more  than  an  arc  can  be  straight  if  tlie 
circle  be  curved." 

Straight  and  curved,  mathematical  terms  signifying  the 
same  things  under  all  possible  circumstances,  cannot,  accord- 
ing to  M.  Bastiat,  be  predicated  with  any  more  certainty  of 
a  line,  than  the  words  good  and  bad  can  be  predicated  of 
restriction  and  prohibition  in  political  economy. 

1  See  note  4,  page  79. 


62         REVIEW  OP  bastiat's  sophisms  of  protection. 

It  is  only  necessary  to  show  a  single  class  of  cases  in 
■which  prohibition  would  be  bad  and  restriction  good,  and 
the  thinness  of  M.  Bastiat's  supposed  logic  will  be  apparent ; 
and  it  is  not  necessary  that  the  case  adduced  should  abso- 
lutely exist.     It  is  sufficient  that  it  might  exist. 

Well,  then,  there  might  be  two  countries  which  produced 
silk  piece  goods.  Call  the  countries  A  and  B.  In  A  the 
rate  of  wages  is  only  one  half  what  it  is  in  B,  but  for  reasons 
which  seem  satisfactory  to  the  people  generally  it  is  con- 
sidered to  be  both  desirable  to  maintain  the  rate  of  wages  in 
B  and  also  to  maintain  the  manufacture  of  silk  goods.  Evi- 
dently the  manufacturers  must  be  protected  sufficiently  to 
offset  the  difference  of  wages.  This  is  one  case  ;  and,  to 
prevent  the  free-trader  from  making  a  specious  although 
unsound  cavil,  let  us  look  at  another  possible  case.  Nation 
B,  by  reason  of  improvements  in  the  application  of  its  labor 
and  the  efficiency  of  it,  can  weave  silk  even  a  little  cheaper 
than  nation  A  ;  but  the  manufacturers  in  nation  A,  being 
vastly  richer  than  those  in  nation  B,  can  (and  do,  whenever 
they  have  a  chance)  sell  at  a  loss,  in  order  to  destroy  the 
manufacturers  in  nation  B,  and  thereafter  be  free  to  charge 
their  own  prices.  In  this  case,  also,  it  would  be  necessary 
to  give  such  protection  as  would  overcome  the  existing  obsta- 
cle to  the  maintenance  of  the  silk  industry  in  nation  A. 
Here,  then,  restriction  would  be  good,  while  prohibition  might 
be  good,  bad,  or  indifferent,  according  to  circumstances.  IF 
(as  alleged  by  free-traders  to  be  sometimes  the  case)  the  silk 
manufacturers  in  nation  B  were  lazy  and  unenterprising, 
using  inferior  machinery,  and  consequently  turning  out  silk 
piece  goods  at  an  unnecessarily  high  price,  —  if,  we  say,  this 
were  the  case,  then  prohibition  would  be  bad,  and  too  high 
a  duty  would  be  bad ;  while  some  duty  would  be  good,  as 
preventing  the  demolition  by  foreigners  of  an  industry  de- 
sired by  the  people. 

Let,  now,  the  Free  Trade  League  show  a  case  where  an 
arc  of  a  circle  is  a  straight  line,  or  else  confess  that  M. 
Bastiat's  reasoning  is  flippant  and  unworthy  to  be  offered  to 
the  American  people. 


REVIEW   OF   BASTIAT'S   SOPHISMS   OF   PROTECTION.  63 

Again,  M.  Bastiat  declares  that  the  definite  effect  of  pro- 
tection is  to  require  from  men  harder  labor  for  the  same  result. 
Let  us  see  how  this  is  made  out,  in  respect  to  the  United 
States,  for  the  education  (!)  of  whose  people  this  and  other 
Looks  of  a  similar  character  are  distributed.  Mr.  Mongredien, 
writing  for  the  Cobden  Club,  shows  us  the  method.  The 
cost  of  American  manufactured  products,  he  says,  is  40 
per  cent  above  the  cost  at  which  similar  products  can  be 
imported.  Why?  Because  the  duty  is  40  per  cent  and 
over,  and  in  spite  of  the  duty  some  goods  are  imported. 
That  is,  if  some  kinds  of  goods  can  be  imported  in  spite  of 
a  duty  of  40  per  cent,  then  the  native  goods  (if  there  be  any 
of  the  same  kind)  must  cost  40  per  cent  more  than  they 
could  be  imported  for.  Then  some  goods  (those  of  which 
the  like  are  imported)  cost  40  per  cent  more  by  reason  of  the 
duty.  Therefore  all  goods  on  which  there  is  a  duty 
(those  kinds  which  are  not  imported  as  well  as  those  which 
are)  must  cost  40  per  cent  more  than  they  could  be  imported 
for! 

From  deductive  reasoning  one  would  have  supposed  that 
the  internal  competition  of  fifty  millions  of  people  might, 
perhaps,  reduce  prices  considerably  below  the  maximum 
possible  price ;  and  a  little  inquiry  as  to  facts  would  have 
shown  that  a  large  part  of  American  products  are  actually 
as  cheap,  or  very  nearly  as  cheap  as  they  could  be  imported 
for,  even  if  there  were  no  duty. 

But  Mr.  Mongredien  preferred  to  ascertain  the  cost  by 
logic  ;  and  he  told  the  American  farmers  they  could  have  for 
one  thousand  millions  of  dollars  from  England  what  they 
paid  fourteen  luindred  millions  for  to  the  native  me- 
chanics and  manufacturers.  The  farmers  being  about  half 
the  population,  the  whole  country  would  save  eight  liundred 
millions,  getting  from  England  for  two  thousand  millions 
wdiat  they  now  pay  twenty-eiglit  hundred  millions  for ; 
and  all  this  built  upon  a  syllogism  in  which  a  distributed 
conclusion  is  drawn  from  undistributed  premises.  Would 
it  not  be  well  for  the  Cobden  Club  to  send  Mr.  Mongredien 
to  school  for  a  year  or  two  before    allowing   him  to  write 


64  REVIEW   OF   BASTIAT'S    SOPHISMS   OF  PROTECTION. 

another  book  for  the  instruction  of  the  American  people? 
But  to  return  to  M.  Bastiat.  The  Free  Trade  League, 
through  him,  tell  the  American  people  that  the  definite 
result  of  protection  is  to  require  from  men  harder  labor  for 
the  same  result.  This  inference  is  founded  upon  the  well- 
known  "  Fallacy  of  Division,"  of  which  Archbishop  Whately 
observes : — 

"  This  is  a  fallacy  with  which  men  are  extremely  apt  to  deceive 
themselves  ;  for,  when  a  multitude  of  particulars  are  presented  to  the 
miud,  many  are  too  weak,  or  too  indolent,  to  take  a  comprehensive 
view  of  them ;  but  con6ne  their  attention  to  a  single  point  in  turn, 
and  then  decide,  infer,  and  act,  accordingly ;  e.  g.  the  imprudent 
spendthrift,  finding  that  he  is  able  to  afford  this,  or  that,  or  the  other 
expense,  forgets  that  all  of  them  together  will  ruin  him." 

M.  Bastiat,  referring  to  France,  maintains  that  iron,  being 
produced  in  England  for  less  labor  and  abstinence  than  in 
France,  had  better  be  bought  by  France  by  means  of  some 
product  in  which  she  has  an  advantage  ;  then  clothing  had 
better  be  bought  in  a  similar  way  of  Belgium  ;  tlien  food  of 
Hungary  or  the  United  States;  and  so  on,  forgetting  that 
all  the  needs  of  France  together  which  could  be  supplied 
more  cheaply  from  abroad  would  come  to  many  times  more 
than  would  the  aggregate  requirements  of  foreign  nations 
for  the  products  of  the  remaining  industries  in  which  France 
has  a  decided  advantage. 

With  regard  to  the  United  States,  the  chapter  has  no  rele- 
vancy ;  for  almost  everything  we  produce  is  produced  with 
as  little  labor  and  abstinence  as  anywhere  in  the  world.  Many 
things  can  be  brought  here  and  sold  for  less  money;  but 
this  is  because  our  wages  are  high,  and  our  labor  altogether 
so  much  more  productive  that  gold  and  silver  are  cheap  with 
us.  Were  we  to  open  our  ports  and  give  up  to  the  foreigner 
a  large  portion  of  our  "  field  of  employment,"  —  wages  and 
money-prices  would  doubtless  decline;  but  nothing  w^ould 
be  produced  with  less  labor  and  abstinence  than  it  is  now. 
Our  foreign  market  miglit  be  increased  a  little  ;  but  our  home 
market  would  be  reduced  many  times  as  much  ;  and  profits. 


1 


REVIEW   OF   BASTIAT'S   SOPHISMS   OP  PROTECTION.  65 

rents,  fees,  salaries,  and  incomes  of  every  description  would 
be  diminished  in  proportion.  Why  so?  Because  the  gross 
annual  product  would  be  diminished  enormously,  and  it  is 
this  which  pays  all  wages,  profits,  and  rents.  But  why 
would  our  gross  annual  product  be  diminished  enormously  ? 
Because  nowhere  in  this  planet  could  be  found  markets  for 
four  thousand  —  soon  to  be  ten  thousand  —  millions  of  the 
products  in  whicli  we  have  an  advantage,  in  addition  to  what 
we  now  export,  nor  could  markets  be  found  for  even  a  third 
part  of  those  vast  amounts.  We  should  not  only  rob  our- 
selves of  a  large  part  of  what  we  now  get  from  the  mechani- 
cal and  manufacturing  arts,  but  we  should  transfer  to  the 
foreigner  all  the  advantages  we  now  derive  from  agriculture. 
The  chapter  consists  chiefly  of  a  conversation  between 
Robinson  Crusoe  and  Friday,  whose  situation  was  not  at  all 
analogous  to  that  of  an  industrial  community ;  and  afterwards 
of  the  doctrine  that,  when  one  of  the  industries  of  a  society 
is  given  over  to  a  foreign  country  the  displaced  labor  will 
occupy  itself  about 

SOMETHING   ELSE. 

This  conclusion  is  drawn  from  Adam  Smith's  doctrine  "  that 
each  industry  is  prevented  from  increasing  by  the  want  of 
capital ; "  it  has  no  place  in  a  world  where  each  industry  has 
unemployed  capital,  and  is  prevented  from  increasing  for 
want  of  a  "  field  of  employment."  In  such  a  world  the 
displaced  labor  and  capital  can  oidy  —  in  the  words  of  Mr. 
J.  S.  Mill  —  squeeze  out  a  living  by  competition  with  other 
labor  and  capital.  Both  the  wages  and  profits  appertaining 
to  the  remaining  industries  must  be  diminished  whenever 
one  is  given  up  to  tlie  foreigner,  for  the  reason  that  tlie  ex- 
truded industry  furnished  a  market  to  nearly  its  full  value 
for  other  products,  while  the  substituted  foreign  industry 
increases  the  foreign  demand  by  only  a  small  percentage  of 
its  amount. 

Let  us  represent  the  various  industiies  (both  productive 
and  unjjroductive)  by  the  letters  of  the  alphabet.  A,  B,  C,  etc. 
Then   V  A  +  V  B  +  V  C,  etc.,  may   represent   the   annual 

9 


Q6  REVIEW   OF   BASTIAT's   SOPHISMS   OF   PROTECTION. 

exchangeable  value  contributed  by  each  description  of  in- 
dustry and  each  description  of  service  to  the  gross  annual 
exchangeable  value,  and  VA-j-VB+VC,  etc.  =  T  A  P  ;  or, 
the  total  annual  product.  A  purchases  of  B,  C,  etc.,  portions 
of  their  annual  products  equalling  in  the  aggregate  VA, 
and  SO  do  B,  C,  and  each  of  the  others.  Now  transfer 
industry  A  to  another  nation,  and  immediately  TAP  be- 
comes TAP  —  V  A ;  that  is,  the  capital  and  labor  before 
employed  by  industry  A  are  in  excess,  and  cannot  find  em- 
ployment by  spreading  themselves  through  the  other  indus- 
tries or  classes  of  service  already  fully  supplied.  A  portion 
of  the  products  of  B,  C,  D,  etc.,  must  go  abroad  to  pay  for 
the  foreign  products  which  have  displaced  industry  A.  If 
these  cost  25  per  cent  less  than  the  native,  then  a  value  equal 
to  I  V  A  will  go  abroad,  and  a  value  equal  to  ^  V  A  will 
remain  distributed  among  B,  C,  D,  etc.,  as  stock  in  addition 
to  their  previously  existing  surplus  stocks.  There  will  be  a 
greater  or  less  glut  of  commodities  and  services  throughout 
the  societ}^ ;  and  the  exchangeable  value  of  B,  of  C,  of  D, 
etc.,  etc.,  will  each  be  found  to  be  diminished,  probably  to  a 
greater  amount,  perhaps  to  a  much  greater  amount,  in  the 
aggregate,  than  the  J  V  A  expected  to  be  saved  by  importing 
from  abroad.  The  eifective  demand,  then,  of  the  whole  com- 
munity, less  industry  A,  for  the  imported  article  at,  say,  three 
dollars,  will  be  less  than  was  the  effective  demand  of  the  same 
persons  for  the  native  article  at  four  dollars,  and  there  will  be 
also  a  necessity  for  supporting  the  labor  of  industry  A  in  idle- 
ness. This  labor  cannot  do  "something  else,"  for  everything 
else  desired  by  the  community  was  done  before  to  the  full 
extent  of  the  then  effective  demand  which  is  ntnv  diminished  ; 
and  not  only  this,  but  production  must  be  also  lessened  in  each 
of  the  remaining  industries.  So  far  from  industry  B  having 
more  to  spend  for  the  products  of  C,  D,  E,  etc.,  industry  B 
will  find  its  own  annual  products  selling  for  less  money  than 
they  did  when  A  got  four  dollars  for  what  the  foreigner  now 
brings  for  three  dollars. 

France  "  has  the  advantage  "  of  other  nations  in  the  pro- 
duction of  many  articles  of  taste,  and  also  in  some  kinds  of 


REVIEW   OF   BASTIAT's   SOPHISMS   OF   PROTECTION.  67 

■wine.  She  exports  these  to  the  extent  of  about  six  hundred 
millions  of  dollars.  It  is  highly  improbable  that  the  opening 
of  her  ports  to  other  nations  could  cause  any  great  increase 
of  consumption  of  her  products  upon  their  part  ;  while  the 
products  which  she  produces  for  herself  at  no  advantage  or 
at  a  disadvantage  come  probably  to  three  thousand  millions. 
Evidently  she  could  not  obtain  any  considerable  increase  of 
the  articles  she  produces  at  a  disadvantage,  except  by  paying 
out  of  her  accumulations  of  treasure.  M.  Bastiat  thought 
she  would  get  the  needed  treasure  from  Peru  ;  but  this  only 
shows  that  his  education  had  been  neglected  in  the  branch  of 
arithmetic.  The  whole  of  the  annual  production  of  precious 
metals  added  to  the  whole  of  the  large  amount  accumulated 
by  France  during  the  whole  period  of  her  existence  would  not 
suffice  to  purchase  abroad  for  a  single  year  the  commodilies 
which  France  makes  for  herself  at  more  or  less  disadvantage, 
compared  with  this,  that,  or  the  other  foreign  country.  As 
he  suggests,  she  might  import  treasure  from  Peru,  and  this 
would  suffice  to  buy  this  article,  or  it  would  suffice  to  buy 
that  article,  or  it  would  suffice  to  buy  the  other  article  ;  but 
when  it  comes  to  adding  all  the  articles  together,  the  insuf- 
ficiency of  the  proposed  resource  becomes  so  manifest  as  to  be 
ridiculous.  It  is  the  fallacy  of  division  fooling  Avith  the  lives 
and  fortunes  of  thirty-four  millions  of  people. 

Chapter  XV.  is  the  "  Little  Arsenal  of  the  Free-Trader." 
These  are  short  sentences  embodying  the  fallacies  already 
sufficiently  answered. 

Chapter  XVI.  proposes  a  number  of  funny  absurdities, 
which  M.  Bastiat  imagines  to  be  of  the  same  nature  as  pro- 
tectionist arguments ;  but  which  only  show  that  he  either 
did  not  understand  or  did  not  choose  to  understand  the  pro- 
tectionist arguments. 

To  work  with  the  left  hand  rather  than  the  right,  to  pre- 
vent the  use  of  machinery,  to  dull  the  axes,  to  fill  u})  canals, 
etc.,  etc.,  would  not  increase  the  gross  annual  product.  To 
employ  a  portion  of  the  population  upon  industries  in  which 


68  REVIEW   OF   BASTIAT'S   SOPHISMS   OP   PROTECTION. 

the  nation  stands  at  no  advantage,  or  even  at  disadvantage, 
when  the  whole  population  cannot  be  employed  upon  the 
industries  in  which  it  has  an  advantage,  or  cannot  be  so  em- 
ployed without  throwing  away  the  natural  advantage,  would 
increase  the  gross  annual  product.  That  is  just  what  M.  Bas- 
tiat  did  not  know ;  and  that  is  why  his  teachings  should  not 
have  been  offered  to  the  American  people. 

Chapter  XVII.,  —  "  Supremacy  by  Labor." 
It  is  impossible  to  do  justice  to  the  sophistry  of  this  chapter 
without  quoting.     It  says  :  — 

"  As,  in  time  of  war,  supremacy  is  obtained  by  superiority  in  arms, 
can,  in  time  of  peace,  supremacy  be  secured  by  superiority  in  labor  ? 

"  This  question  is  of  the  greatest  interest,  at  a  time  when  no  one 
seems  to  doubt  that,  in  the  field  of  industry,  as  on  that  of  battle,  the 
stronger  crushes  the  weaker. 

"  This  must  result  from  the  discovery  of  some  sad  and  discouraging 
analogy  between  labor,  which  exercises  itself  on  things,  and  violence, 
which  exercises  itself  on  men ;  for  how  could  two  things  be  identical 
in  their  effects,  if  they  were  opposed  in  their  nature  ? 

"  And  if  it  be  true  that,  in  manufacturing,  as  in  war,  supremacy  is 
the  necessary  result  of  superiority,  why  need  we  occupy  ourselves 
with  progress,  or  social  economy,  since  we  are  in  a  world  where  all 
has  been  so  arranged  by  Providence  that  one  and  the  same  result, 
oppression,  necessarily  flows  from  the  most  antagonistic  principles? 

"  Referring  to  the  new  policy  towards  which  commercial  freedom 
is  drawing  in  England,  many  persons  make  this  objection,  which  I 
admit  occupies  the  sincerest  minds  :  'Is  England  doing  anything  more 
than  pursuing  the  same  end  by  different  means  ?  Does  she  not  con- 
stantly aspire  to  universal  supremacy  ?  Sure  of  the  superiority  of 
her  capital  and  labor,  does  she  not  call  in  free  competition  to  stifle 
the  industry  of  the  Continent,  reign  as  sovereign,  and  conquer  the 
privilege  of  feeding  and  clothing  the  ruined  peoples  ? ' 

"  It  would  be  easy  for  me  to  demonstrate  that  these  alarms  are 
chimerical  ;  that  our  pretended  inferiority  is  greatly  exaggerated ; 
that  all  our  great  branches  of  industry  not  only  resist  foreign  competi- 
tion, but  develop  themselves  under  its  influence ;  and  that  its  infallible 
effect  is  to  bring  about  an  increase  in  general  consumption,  capable  of 
absorbing  both  foreign  and  domestic  products." 


REVIEW   OF    BASTIAT's   SOPHISMS   OF  PROTECTION.  69 

This  is  the  language  of  the  Anti-Corn-Law  League,  of  the 
Cobden  Club,  of  the  Manchester  manufacturers,  —  of  the 
spider  to  the  fly. 

Labor  in  its  nature  is  opposed  to  war.  Labor  produces; 
war  destroys.  Labor  employs  itself  on  things  ;  war  employs 
itself  upon  persons.  Opposite  causes  cannot  produce  identi- 
cal effects.  Does  this,  O  reader,  persuade  you  that  there  is 
no  valid  analogy  between  the  struggles  of  opposing  armies 
for  the  possession  of  a  province,  and  the  struggles  of  compet- 
ing industries  for  the  possession  of  a  market  ?  To  seriously 
ask  the  question  would  be  to  insult  you  ;  and  yet  the  trash 
is  persuasive  to  the  hasty  reader.  When  he  pauses  for  a 
moment  and  reads  again  he  sees  that  he  is  trifled  with. 

That  which  moves  to  war  is  the  desire  to  overcome  an 
opponent.  That  which  moves  to  industrial  competition  is  the 
desire  to  overcome  an  opponent,  —  to  overcome  one  who  pre- 
vents your  selling  as  much  or  as  dearly  as  you  would.  The 
causes  are  similar.  It  is  only  the  methods  of  procedure  which 
differ.  The  paragraph  about  manufacturing,  supremacy,  Pro- 
vidence, oppression,  and  antagonistic  principles  is  a  similar 
logical  puzzle,  which  any  intelligent  reader  can  solve  for  him- 
self. It  assumes  that  there  are  antagonistic  principles  wher- 
ever the  methods  of  procedure,  the  instruments  used  to  obtain 
the  end,  are  dissimilar.  The  paragraph  commencing,  "  It 
would  be  easy  for  me  to  demonstrate,"  is  a  bundle  of  asser- 
tions, pure  and  simple.  There  is  not  a  particle  of  argument 
in  it.    The  "  proof"  comes  afterwards  and  consists  in  this  :  — 

"  If  we  see  in  any  product  but  a  cause  of  labor,  it  is  certain  that 
the  alarm  of  the  protectionists  is  well  founded.  If  we  consider  iron, 
for  instance,  only  in  connection  with  the  masters  of  forges,  it  might  be 
feared  that  the  competition  of  a  country  where  iron  was  a  gratuitous 
gift  of  nature  would  extinguish  the  furnaces  of  another  country, 
where  ore  and  fuel  were  scarce. 

"  But  is  this  a  complete  view  of  the  subject  ?  Are  these  relations 
only  between  iron  and  those  who  make  it  ?  Has  it  none  with  those 
who  use  it  ?  Is  its  definite  and  only  destination  to  be  produced  ?  And 
if  it  is  useful,  not  only  on  account  of  the  labor  which  it  causes,  but  on 
account  of  the  qualities  which  it  possesses,  and  the  numerous  services 


70  REVIEW   OF  BASTIAT's   SOPHISMS   OF  PROTECTION. 

for  which  its  hardness  and  jnalleability  fit  it,  does  it  not  follow  that 
foreigners  cannot  reduce  its  price,  even  so  far  as  to  prevent  its  produc- 
tion among  us,  without  doing  us  more  good,  under  the  last  statement 
of  the  case,  than  it  injures  us  under  the  first? 

"  Foreign  superiority  prevents  national  labor  only  under  some  cer- 
tain form,  and  makes  it  superfluous  under  this  form,  but  by  putting 
at  our  disposal  the  very  result  of  the  labor  thus  annihilated." 

Tins  is  wonderful !  What  earthly  relevancy  has  the  second 
paragraph?  Is  not  French  iron  hard  and  malleable?  The 
French  have  iron  in  either  case.  The  only  question  is  whether 
they  shall  have  it  at  one  price  made  at  home  or  at  another  price 
made  abroad ;  and  in  a  former  chapter  M.  Bastiat  put  the 
price  at  twelve  francs  for  French  and  eight  francs  for  English 
iron.  But  he  argues  that  to  procure  the  English  iron,  France 
will  have  only  to  "detach"  from  her  general  labor  a  smaller 
portion  than  she  would  require  to  produce  it  herself.  France 
would  save  one  third  of  the  labor  before  used  in  making  iron. 
The  careful  reader  will  see  that  he  assumes  that  the  whole 
labor  power  of  the  country  is  employed  in  either  case  ;  while 
the  fact  is,  and  must  be,  that  the  whole  is  not  employed  in 
either  case.  Even  when  France  makes  her  own  iron,  every 
industry  within  her  borders  is  limited  by  the  limits  of  the 
field  of  employment.  There  are  so  many  desires  known  to 
her  people  which  they  have  found  out  means  of  gratifying 
with  such  expenditure  of  effort  as  they  are  willing  to  pay,  — 
so  many  and  no  more.  Their  desires  even  are  not  infinite  ;  but 
even  if  they  were,  the  desires  they  know  how  to  gi'atify  with- 
out more  exertion  than  they  are  willing  to  make,  are  very  far 
from  infinite  ;  they  are  quite  limited.  Their  aggregate  of 
these  constitutes  the  field  of  employment,  outside  of  which 
there  are  always  (except  during  peiiods  of  abnormal  excite- 
ment and  perhaps  even  then)  many  unemployed  persons, 
many  half  employed  persons,  many  persons  helping  others  to 
do  what  they  can  well  enough  do  alone.  This  unemployed 
labor  is  constantly  striving  to  find  something  to  do,  and  the 
unemployed  capital  of  the  country  is  constantly  striving  to 
find  something  to  do,  —  some  means  of  gratifying  a  desire  at 
such  price  as  the  community  will  be  willing  and  able  to  pay. 


REVIEW   OF   BASTIAT's   SOPHISMS   OF  PROTECTION.  71 

The  community,  then,  does  not  "  detach  "  a  portion  of  its 
previously  employed  labor  to  make  iron,  but  a  portion  and 
only  a  portion  of  its  previously  unemployed  or  half  emploj^ed 
labor,  and  the  then  more  fully  employed  labor  has  the  means 
of  buying  from  all  the  other  industries  ;  their  field  of  employ- 
ment is  increased.  According  to  M.  Bastiat's  philosophy,  if 
iron  and  its  products  should  suddenly  be  rained  down  out  of 
the  sky  already  shaped  for  use,  the  United  States  would 
immediately  have  set  free  an  amount  of  labor  that  would  pro- 
duce "  something  else  "  to  the  value  of,  say,  three  hundred 
millions  of  dollars.  But  "  everything  else "  for  which  the 
people  have  a  desire  is  already  produced  to  a  somewhat  greater 
extent  than  can  be  sold,  as  is  evidenced  by  the  existing  sur- 
plus stocks  of  commodities.  The  total  industry  of  the  com- 
munity is  kept  up  by  motives,  and  one  of  these  motives  is  the 
desire  for  iron.  The  immediate  effect,  then,  of  iron  dropping 
down  ready  fashioned  from  the  skies  would  be  "to  diminish 
the  field  of  employment  to  the  extent  of,  say,  three  hundred 
millions ;  but  as  iron  is  only  a  means  towards  procuring  other 
things,  notably,  food,  clothing,  shelter,  and  transportation, 
the  getting  iron  for  nothing  might  make  it  possible  to  procure 
a  greater  supply  of  food,  clothing,  shelter,  and  transportation, 
with  the  same  effort,  and  the  ultimate  result  might  be  that 
as  great  or  even  a  greater  field  of  employment  would  be  found 
in  producing  a  greater  supply.  But  meanwhile,  during  the 
growth  of  a  larger  demand  for  food,  clothing,  shelter,  and 
transportation,  between  two  and  three  millions  of  people 
would  have  to  go  without  food,  clothing,  shelter,  and  trans- 
portation, or  squeeze  them  by  competition  out  of  the  balance 
of  the  community.  The  immediate  effect  would  certainly  be 
a  great  diminution  of  the  effective  demand  of  the  community 
for  food,  clothing,  shelter,  and  transportation,  —  a  glut. 
There  would  be  much  more  of  all  these  than  the  community 
as  a  whole  had  means  of  buying.  There  would  be  a  period 
of  distress  and  depression,  and  political  econom}^  does  not 
perhaps,  at  present,  possess  the  means  of  saying  how  long 
such  depression  would  continue,  nor  even  of  saying  decis- 
ively that  it  would  not  end  in  a  permanent  deterioration  of 


72  REVIEW   OF  BASTIAT's   SOPHISMS   OF  PROTECTION. 

the  condition  of  the  community ;  in  which  case  the  seem- 
ing gift  would  prove  to  be  a  gigantic  evil,  somewhat  analo- 
gous to  the  fortune  with  which  a  fond  father  paralyzes  the 
powers  and  prevents  the  development  of  his  children.  It  is 
to  be  hoped  that  political  economy  will  not  always  be  incom- 
petent to  solve  such  problems  ;  but  it  certainly  will  be  as  long 
as  it  remains  innocent  of  all  knowledge  of  their  existence  ; 
so  long  as,  with  M.  Bastiat  and  Mr.  J.  S.  Mill,  it  supposes  that 
displaced  labor  and  capital  always  find  "something  else  "  to  do. 
The  writer  feels  guilty  for  having  mentioned  so  upright 
and  serious  a  writer  as  Mr.  J.  S.  Mill  in  the  same  sentence  as 
M.  Bastiat;  but  they  agreed  in  supporting  the  same  doctrine 
as  to  capital  and  its  effects  upon  industry,  and  in  the  deduc- 
tions from  that  doctrine  ;  in  all  else  they  are  very  wide  apart. 
In  reviewing  Mr.  Mill,  one  would  be  spared  the  disagreeable 
task  of  combating  the  arts  of  the  rhetorical  sophist,  the 
appeals  to  prejudice,  to  anger,  to  pity,  to  greed,  to  supersti- 
tion, to  misguided  or  affected  philanthropy.  He  would  meet 
with  some  very  important  errors  in  reasoning,  strange  as  this 
is  in  an  unquestionably  pre-eminent  logician  ;  but  everything 
is  honest,  straightforward,  and  such  as  the  spirit  of  the  great 
reasoner,  looking  back  upon  life,  need  not  blush  to  have 
written,  M.  Bastiat  closes  his  "  Sophisms  of  Protection  "  as 
follows :  — 

"  Let  us  decide  that  supremacy  by  labor  is  impossible  and  contra- 
dictory, since  all  superiority  which  manifests  itself  among  a  people  is 
converted  into  cheaj^ness,  and  results  only  in  giving  force  to  all  others. 
Let  us,  then,  banish  from  political  economy  all  those  expressions  bor- 
rowed from  the  vocabulary  of  battles  :  to  struggle  with  equal  arms,  to 
conquer,  to  crush  out,  to  stifle,  to  be  beaten,  invasion,  tribute.  What  do 
these  words  mean  ?  Squeeze  them,  and  nothing  comes  out  of  them. 
"VVe  are  mistaken ;  there  come  from  them  absurd  errors  and  fatal 
prejudices.  These  are  the  words  which  stop  the  blending  of  peoples, 
their  peaceful,  universal,  indissoluble  alliance,  and  the  progress  of 
humanity." 

So  writes  M,  Bastiat.  Now  compare  with  his  words  those 
of  Horace  Greeley,  Speaking  of  some  strictures  upon  the 
effects  of  reckless  competition,  he  says  :  — 


REVIEW   OP   BASTIAT's   SOPHISMS   OP  PROTECTION.  73 

"  The  justice  of  these  strictures  I  have  at  least  twice  seen  realized 
on  a  gigantic  scale,  in  the  general  prostration  of  the  manufacturing 
industry  of  my  countrymen  under  the  pressure  of  European,  mainly 
of  English,  competition.  That  industry  was  thus  crushed  out  after  the 
peace,  of  1815,  when  the  eminent  Henry  Brougham  (after\yards  Lord 
Brougham)  remarked  (when  Great  Britain  was  pouring  out  the  goods 
that  crushed  our  then  infant  manufactures)  that  '  P^ngland  can  afford 
to  incur  some  loss  ybr  the  purpose  of  destroying  foreign  manufactures  in 
their  cradle  ;  '  and  the  noted  economist  and  free-trader,  Joseph  Hume, 
made  a  similar  remark  in  1828.  Our  tariff  enacted  in  that  year 
rendered  all  efforts  to  cripple  and  prostrate  our  manufacturing  industry 
temporarily  fruitless ;  but  it  was  otherwise  after  the  compromise 
tariff  of  1833  began  to  take  full  effect,  in  the  reduction  of  the  duties 
to  a  (presumptively)  revenue  standard  which  culminated  in  the  collapse 
alike  of  industry  and  revenue  in  1840-42. 

"  A  report  on  strikes  made  to  the  British  Parliament  in  1854  sig- 
nificantly said :  — 

"  'Authentic  instances  are  well  known  of  (British)  employers  having 
in  such  times  (of  depressed  prices),  carried  on  their  works  at  a  loss 
amounting  to  three  or  four  hundred  thousand  pounds  in  the  course  of 
three  or  four  years.  If  the  efforts  of  those  who  encourage  the  com- 
bination to  restrict  the  amount  of  labor,  and  to  produce  strikes,  were 
to  be  successful  for  any  length  of  time,  the  great  accumulations  of 
capital  could  no  longer  be  made  which  enable  a  few  of  the  most 
wealthy  capitalists  to  overwhelm  all  foreign  competition  in  times  of 
great  depression^  and  thus  to  clear  the  way  for  the  whole  trade  to  step 
in  when  prices  revive,  and  to  carry  on  a  great  business  before  foreign 
capital  can  again  accumulate  to  establish  a  competition  in  prices,  with 
any  chance  of  success.  The  great  capitals  of  this  country  are  the 
great  instruments  of  warfare  against  the  competing  capitals  of  other 
countries,  and  are  the  most  essential  instruments  now  remaining,  by 
which  our  manufacturing  supremacy  can  be  maintained ;  the  other 
elements,  cheap  labor,  abundance  of  raw  materials,  means  of  communi- 
cation, and  skilled  labor  being  rapidly  in  [jrogrcss  of  being  equalized.'  " 

It  will  be  seen  that  Mr.  Greeley  bears  witness  to  our  indus- 
tries having  been  twice  prostrated  by  their  English  competi- 
tors in  his  time,  and  it  is  matter  of  general  knowledge  also 
that  the  same  thing  happened  to  the  Portuguese  industries 
after  the  treaty  of  Methuen,  and  to  the  Irish  industries  after 
the  union,  and  so  with  Turkey  and  India; 

10 


7-1  REVIEW   OF   BASTIAT's  SOPHISMS   OF  PROTECTION. 

The  reader  can  then  form  his  own  opinion  about  the  hardi- 
hood of  JNI.  Bastiat  when  he  attempted  to  prove  that  such 
things  cannot  happen,  by  a  process  of  false  logic  which  has 
been  the  somewhat  disagreeable  task  of  the  writer  to  expose. 
The  rest  of  his  book  is  made  up  chiefly  of  rhetorical  sophisms, 
in  which  taxes  and  obstacles  which  do  increase  the  productive 
power  of  the  community  are  classed  with  the  taxes  and 
obstacles  which  do  not  increase  it ;  of  appeals  to  our  pity  that 
the  '-'■poor  worhman^''  after  getting  his  wages  from  his  fellow- 
citizens,  should  not  be  allowed  to  spend  them  among  foreign- 
ers, and  in  appeals  to  class  prejudices  by  abuse  of  every  descrip- 
tion poured  out  upon  everybody  who  is  protected  from  the 
English  manufacturer.  They  are  cheats,  swindlers,  robbers, 
monopolists,  oppressors,  thieves ! 

Now  it  has  been  held  by  every  respectable  economist,  from 
Adam  Smith  down,  that  it  is  impossible  for  any  industry  to 
long  obtain  a  profit  above  that  usual  in  the  community ;  and 
it  would  seem,  therefore,  that  all  this  abuse  is  as  unjust  as 
it  is  unseemly ;  hut  if  there  be  in  any  case  reason  to  fear  that 
manufacturers  may  combine  to  exact  a  higher  profit,  our  own 
are  within  reach  of  control.  Let  the  fact  be  proved,  and 
nothing  is  easier  than  to  bring  them  to  reason,  by  simply 
reducing  the  duty  to  what  will  give  them  an  adequate  and 
not  an  excessive  protection.  We  should  have  no  such  power 
over  the  foreigners.  When  they  have  once  ruined  our  own 
industries  they  can,  if  they  combine,  charge  us  whatever 
they  please. 

If,  then,  there  be  any  foundation  for  the  cry  of  monopoly, 
the  possibility  of  such  a  combination  is  the  best  of  all  reasons 
for  standing  by  our  own  and  not  the  alien  manufacturers. 
These  can  be  ruled.     The  others  cannot. 

Part  III,,  —  "  Spoliation  and  Law." 

This  supremely  sophistical  chapter  endeavors  to  connect,  in 
the  mind  of  the  reader,  the  totally  different  matters  of  pro- 
tection and  communism.  At  the  time  it  was  written,  society 
in  France  was  alarmed  at  the  pretensions  of  communism,  and 
the  endeavor  to  make  out  some  similarity  between  it  and 


EEVIEW   OF  BASTIAT's   SOPHISMS   OF   PROTECTION.  75 

protection  was  as  shrewd  as  anj'thing-  can  bo  wliicli  is  abso- 
lutely dishonest.  The  same  attempt  has  been  made  by  the 
unscrupulous  upon  this  side  of  the  Atlantic. 

Civilized  men  everywhere  recognize,  either  consciously  or 
unconsciously,  the  fact  that,  without  the  aid  of  tools,  machines, 
improved  farms,  mills,  forges,  railroads,  stores  of  food,  mate- 
rials, and  shelter,  etc.,  —  without,  in  short,  the  aid  of  instru- 
ments of  production,  the  gross  annual  product  of  labor 
would  be  incomparably  less  than  it  is  ;  they  recognize,  also, 
that  these  instruments  of  production  cannot  come  into  exist- 
ence nor  be  kept  in  repair,  except  through  abstinence,  which 
is,  therefore,  entitled  to  such  portion  of  the  increased  product 
as  demand  and  supply  determine  to  be  the  just  value  of 
their  use  ;  they  recognize,  also,  that  to  allow  individuals  to 
possess  these  instruments  and  enjoy  said  portion  of  their 
fruits  is  the  most  economical  and  efficient  method  for  bring- 
ing them  into  existence  and  keeping  them  in  repair,  utility 
being  here  completely  at  one  with  justice  ;  they  recognize 
even  tliat  those  proprietors  who  do  nothing  except  to  live 
within  their  income  do,  nevertheless,  thereby  render  a  most 
essential  service  to  society,  for  living  within  their  income  is 
nothing  less  than  keeping  in  repair  the  "  instruments  "  which 
furnish  them  with  incomes  ;  and  in  recognizing,  consciously 
or  unconsciously,  these  facts,  all  men  of  common  sense  j)er- 
ceive  the  rights  of  property  to  be  based  upon  the  all-sufScient 
foundation  of  the  greatest  good  to  the  whole  society,  —  not 
the  greatest  good  only  for  to-day,  or  this  year,  but  for  aU 
time.  But  the  common  sense  of  mankind  also  recognizes 
that,  while  the  greatest  good  of  the  whole  is  the  foundation 
of  the  rights  of  property,  it  also  puts  limits  to  those  rights. 
As  they  are  founded  and  justified  by  the  good  of  tlie  wliole, 
they  must  logically  be  restricted  to  that  which  in  the  long 
run  is  beneficial  to  all.  No  man  is  allowed  to  use  his  prop- 
erty to  found  a  college  for  teaching  what  the  community 
generally  accounts  to  be  vice,  nor  to  run  gambling-houses  or 
lotteries,  nor  to  erect  unsafe  houses,  nor  to  sail  ships  which 
have  become  unseaworthy,  nor  to  establish  anything  which  is 
a  nuisance  or  a  source  of  disease,  nor  to  run  a  bank  except 


76  REVIEW   OF   BASTIAT's   SOPHISMS  OF  PROTECTION 

under  conditions  protecting  public  interests,  etc.,  ad  infinitum. 
Property  is  not  weukened  by  these  necessary  and  proper  re- 
straints, bat  only  prevented  from  weakening  its  own  just  and 
legitimate  claims,  and  becoming  in  some  respects  a  nuisance, 
instead  of  a  great  blessing  to  the  community.  Indeed,  he  is 
no  friend  of  property,  but  its  dangerous  enemy,  who  maintains 
that  each  single  possessor  has  the  indefeasible  right  to  veto  the 
decisions  of  the  whole  society,  and  that,  too,  in  the  cause  of  a 
pseudo-theory  composed  of  a  vast  mass  of  bad  logic  and  of 
totally  irrelevant  rhetoric.  The  argument  that  "  the  highest 
right  of  property  is  the  right  to  exchange  it  for  other  property ; " 
that,  therefore,  any  restraint  or  regulation  of  this  right,  —  in 
short,  the  forbidding  of  any  exchange,  however  detrimental, 
—  is  an  unwarrantable  invasion  of  the  rights  of  property,  and 
therefore  akin  to  communism, —  this  argument  can  only  be 
used  by  one  who  has  the  incredible  folly  to  suppose  that  the 
American  people  are  a  nation  of  unmitigated  noodles. 

In  the  first  place,  the  right  to  exchange  it  is  not  the  highest 
right  of  property.  A  higher  right  still  is  the  right  to  an 
unmolested  enjoyment  either  of  the  property  itself  or  of  the 
income  thereof.  Second,  another  higher  right  is  the  right  to 
protection  against  foreign  attacks,  whether  civil  or  military. 
Third,  if  even  it  were  the  highest  right,  this,  like  every  other 
right  of  property,  must  give  way  before  the  vastly  higher 
and  more  important  rights  of  the  whole  community.  Com- 
pensation is  given  where  the  case  requires  it ;  compensation 
is  not  given  where  the  interference  produces  no  damage,  but 
a  great  benefit,  as  when  protective  laws  are  passed. 

"  But,"  exclaim  the  free-traders,  "  protective  laws  are  not 
a  benefit,  but  an  injury." 

Ah,  gentlemen,  you  undertook  to  bolster  the  doctrine  of  free 
trade  by  an  argument  from  the  rights  of  property  ;  but  we 
now  find  that  the  argument  about  the  rights  of  property  breaks 
down  unless  we  first  assume  the  free-trade  doctrine  to  be  cor- 
rect. You  are  attempting  to  make  two  doctrines  hold  each 
other  up,  when  neither  the  one  nor  the  other  can  stand  alone. 

Jf  the  free-trade  doctrine  were  sound,  the  interference  with" 
foreign  exchanges  would  be  unwise,  but  by  no  means  beyond 


REVIEW   OF   BASTIAT's   SOPHISMS   OP   PROTECTION.  77 

the  restrictive  rights  of  the  whole  people  ;  if  the  protection- 
ist doctrine  be  sound,  the  interference  is  eminently  beneficial ; 
but,  in  either  case,  there  is  nothing  resembling  the  proposed 
communistic  abolition  of  property  which  would  be  ruinous 
alike  to  individual  owners  and  to  the  public. 

The  attempt,  then,  to  smooch  protection  by  coupling  it 
with  communism  is  simply  a  dishonest  rhetorical  artifice,  dis- 
graceful to  tlie  author  and  insulting  to  the  readers  whom  he 
addresses.     It  is  precisely  equivalent  to  calling  them  fools. 

And  here  we  come  to  the  end  of  a  book  which  shows 
much  wit,  vivacity,  ingenuity,  and  audacity,  but  which 
stands  almost  alone  among  transatlantic  productions  for  the 
entire  absence  of  that  serious,  earnest  desire  for  truth  which 
political  economists  usually  display.  Others  may  involve 
themselves  in  logical  puzzles ;  but  they  appear  to  do  so  unin- 
tentionally. Possibly  this  may  have  also  been  tlie  case  with 
M.  Bastiat,  and  the  semblance  of  llippancy  and  insincerity 
may  be  rather  apparent  than  real  ;  but,  at  all  events,  one 
cannot  rise  from  a  diligent  study  of  him  without  a  profound 
conviction  that  no  member  of  the  Free  Trade  League  can 
have  carefully  perused  the  book  which  they  translated  and 
printed  in  order  "  to  educate  public  opinion  in  the  United 
States,  and  convince  the  people  of  the  folly  and  wrongfulness 
of  the  protective  system." 

Any  other  conviction  would  involve  the  gross  insult  of 
supposing  them  to  be  eitlier  exceedingly  flat  or  exceedingly 
dishonest,  or  both. 

Bastiat's  sophistries  are  based  chiefly  upon  the  following 
erroneous  propositions :  — 

*'  1.  That  industry  is  limited  by  capital,  whereas  both  are  limited  by 
the  tield  of  employment. 

"  2.     That  human  labor  is  never  without  employment. 

"  3.  That  the  wages  fund  is  a  fixed  amount,  equal  to  the  existing  cap- 
ital, and  the  whole  of  it  always  employed. 

"  4.  That  protective  laws,  which  cause  more  people  to  be  employed 
with  increased  production,  are  the  same  in  effect  as  dull  axes,  ob- 
structed canals,  working  with  the  left  hand,  amputating  one  hand, 
etc.,  which  would  cause  more  people  to  be  employed  without 
increased  production. 


78  REVIEW   OF   BASTIATS   SOPHISMS   OF   PROTECTION. 

"  5.  That  inasmuch  as  many  obstacles  to  exchanges  are  also  obstacles 
to  opulence,  therefore  all^ obstacles  to  exchanges  are  obstacles  to 
opulence." 

In  short,  the  argumentative  portion  of  the  book  displays 
a  neglect  of  every  canon  of  logic,  both  inductive  and  deduc- 
tive. The  rest  is  rhetoric,  and  is  good  of  its  kind,  —  witty, 
vivacious,  impressive,  and  well  suited  to  impose  upon  those 
who  are  not  clever  enough  to  see  that  it  proves  nothing,  and 
is  totally  inapplicable  to  any  existing  society  or  to  any  society 
which  could  exist  while  man  is  constituted  as  he  is. 

Common  sense  is  unconscious  logic ;  logic  not  yet  intro- 
spective ;  logic  which  has  not  yet  named  its  processes,  but 
which  sees  and  casts  aside  a  blunder  intuitively ;  and  there 
is  too  much  of  this  sort  of  logic  in  the  brains  of  the  working 
people  of  America  to  allow  much  harm  to  come  from  such  a 
book  as  Bastiat's  "  Sophisms  of  Protection." 


REVIEW   OF   BASTIATS   SOPHISMS   OP  PROTECTION.  79 

1  My  friend,  Mr.  David  H.  Mason,  observes  here  :  "  That,  in  point  of  fact, 
individuals  do  not  possess  the  claimed  riglit,  and  have  least  of  it  where  civili- 
zation is  greatest.  The  disposition  of  one's  own  property  is  not  a  natural  right, 
but  a  conventional  riglit, — a  right  limited  by  law  or  by  custom,  based  on  the 
views  taken  of  the  individual's  obhgations  to  the  society  of  which  he  is  a  unit. 
Whatever  may  be  said  theoretically  about  the  right  of  each  individual  to  the 
free  disposition  of  his  own  property,  he  does  not  in  any  civilized  community 
possess  such  claimed  right.  Restraint,  in  a  multitude  of  forms,  confronts  every 
member  of  the  community  in  the  disposition  of  his  property.  No  person  can 
legally  dispose  of  his  property  in  such  a  way  as  to  interfere  with  the  rights  of  his 
fellow-citizens.  He  cannot  use  his  capital  to  erect  a  frame-building  within  the 
limits  of  a  municipal  fire-district.  He  cannot  spend  his  money  so  as  to  commit 
a  public  nuisance ;  as,  for  example,  by  locating  a  bone  or  soap  factory,  with  its 
noisome  stench,  amid  the  residence  quarter  of  a  town.  He  cannot,  without 
incurring  heavy  penalties,  invest  his  means  in  publishing  clearly  immoral  news- 
papers or  books,  which  operate  to  debauch  public  sentiment.  If  he  is  an  apothe- 
cary, he  cannot  sell  poisons  indiscriminately,  but  is  therein  subjected  to  various 
restrictions.  K  he  is  a  manufacturer,  he  cannot  purchase  for  use  in  his  business 
any  machinery  which  infringes  a  patent,  without  making  himself  liable  for 
exemplary  damages.  If  he  is  a  publisher,  he  cannot,  without  violating  the  law 
and  incurring  its  punishment,  print  a  book  for  sale  which  has  been  copyrighted 
in  his  country,  and  for  which  printing  he  does  not  possess  the  imprimatur  of  tlie 
author  or  the  permission  of  the  owner.  If  he  is  a  shipmaster,  he  cannot  sail 
his  vessel  into  the  harbor  of  destination  according  to  his  own  separate  will,  but 
according  to  the  will  of  the  health-officer  of  the  port,  who  may  force  him  into 
detention  at  quarantine  quarters.  Formerly  in  the  Soutliern  States  it  was  legal 
to  dispose  of  negroes  as  property.  That  was  then  a  conventional  right ;  now  it 
is  a  conventional  wrong.  A  protective  tariff  rests  upon  the  same  general  prin- 
ciple, that  society  is  injured  by  permitting  to  individuals  the  free  disposition  of 
their  property  in  purchase  of  or  exchange  for  imported  property." 

2  Much  protection  was  taken  from  pig-iron,  the  base  of  our  iron  and  steel 
industries  in  1870,  and  there  was  a  heavy  reduction  of  duties  on  a  wide  range 
of  manufactures  in  1872.  But  for  these  changes  the  country  might  perhaps 
have  escaped  the  panic  of  1873  in  spite  of  the  contraction  of  the  currency,  &c. 

3  After  all  the  treasure  it  can  possibly  spare  is  gone,  government  bonds,  rail 
road  bonds  and  stock,  mortgages,  &c.,  will  go,  and  during  all  this  process  B  will 
be  unable  to  compete  with  A  by  manufacturing  for  herself.  The  industries  in 
which  she  is  inferior  will  be  destroyed,  and  she  will  be  kept  continually  in  the 
condition  of  treasure-famine.  She  will  never  have  enough  of  the  precious 
metals  to  suffice  as  a  basis  for  a  safe  and  stable  currency. 

*  There  is  an  exception  when  the  individuals  of  a  rommunity  invest  largely 
in  other  lands ;  but  this  kind  of  wealth,  as  Adam  Smith  has  observed,  is  of  a 
very  unstable  and  fugitive  character. 


REVIEW 

Of  Professor  Sumner's  article  in  the  March  number  of  the  Princeton  Review,  entitled,  — 

«'The  Argument  against  Protective  Taxes." 


A  PROTECTIONIST  cannot  even  pass  by  the  title  without  ob- 
jection. A  tax  is  not  necessarily  a  burden.  If  the  money 
be  well  and  economically  expended,  and  gives  us  good  roads, 
good  water-works,  good  police,  and  good  government  at  what 
they  ought  to  cost,  then  a  tax  is  a  great  blessing  and  sav- 
ing; but,  unfortunately,  the  money  is  often  expended  reck- 
lessly and  foolishly,  and  so,  through  abuses,  the  very  name 
of  tax  becomes  offensive.  The  free-trader  who  writes 
about  "Protective  Taxes"  avails  himself  of  this  existing  pre- 
judice, with  the  effect  of  disgusting  the  reader  with  protection 
at  the  outset,  in  advance  of  all  argument  in  respect  to  it. 
The  word  tax  also  gives  two  false  impressions :  first,  that 
all  protected  articles  cost  the  consumer  more  than  they  would 
if  not  protected ;  and,  second,  that  when  they  cost  more,  the 
consumer  gets  no  counterbalancing  or  greatly  overbalancing 
advantage.     In  this  sense  Professor  Sumner  writes  that,  — 

"  Every  cent  paid  in  protective  taxes  lessens  the  power  of  the  cit- 
izen to  pay  revenue  taxes  for  the  discharge  of  the  pubhc  burdens. 
Hence  the  fact  that  we  have  heavy  public  burdens  is  just  the  reason 
why  we  cannot  afiford  to  squander  our  means  in  paying  taxes  to  our 
neighbors  for  carrying  on  (as  they  themselves  allege)  unproductive 
industries." 

This  argument  was  i\sed  by  Adam  Smith  one  hundred  and 
thirty  years  ago  in  the  lectures  which  afterwards  were  thrown 
into  the  form  of  the  famous  ''  Enquiry  into  the  Nature  and 
Causes  of  the  Wealth  of  Nations  j  "  but  the  human  race  ought 


2  EEVIEW   OF   PROFESSOR   SUMNER'S 

to  have  learned  something  in  one  hundred  and  thirty  years, 
and  it  has  been  many  times  shown,  or  at  all  events  is  easily 
shown,  that  where  a  protective  law  causes  labor  and  capital, 
otherwise  not  occupied,  to  produce  an  article  for  81.25  which 
could  be  imported  for  ^1.00,  the  nation  does  not  lose  twenty- 
five  cents  but  gains  the  dollar.  The  tax  gives  to  the  totality 
of  consumers  five  times  what  it  takes  from  them.  To  this 
it  may  be  replied  that  labor  never  need  be  unoccupied  where 
there  is  much  land  to  be  had  for  the  asking,  that  it  can 
always  go  to  farming  ;  but  here  comes  in  the  fallacy  of  sup- 
posing that  when  we  all  went  to  farming  there  would  be  the 
same  favorable  market  for  our  products  that  exists  now. 
Agriculture,  it  is  true,  is  the  field  in  which  we  have  the 
greatest  advantage  over  Europe  ;  but  we  might  easily  have 
so  pressed  the  cultivation  of  this  field  as  to  have  transferred 
the  whole  advantage  to  Europe  and  have  kept  no  part  of  it 
for  ourselves,  —  to  have  been  compelled  to  eat  Indian  corn 
and  rye,  while  we  exported  our  wheat  to  buy  a  very  small 
modicum  of  conveniences.  We  have  had  wisdom  enough 
to  stop  short  of  this  supreme  folly,  by  turning  a  portion 
of  our  population  upon  other  fields  in  which  we  are  at  some 
disadvantage  as  compared  to  Europe ;  and,  by  doing  so,  we 
have  made  the  whole  body  of  our  labor  vastly  more  produc- 
tive,—  more  productive  per  man  than  that  of  anj'-  other  coun- 
try in  this  planet.  Here  a  free-trader  would  point  out  some 
particular  article  which  —  perhaps  only  for  the  moment,  but 
jjerhaps  even  permanently  —  costs  in  wheat,  at  the  present 
price  of  wheat,  more  than  it  could  be  imported  for ;  and  he 
says  to  the  individual  farmer:  "  See  how  much  more  cheaply 
3'OU  could  get  this  from  abroad !  "  and  he  persuades  the  farmer 
(and  himself  too)  that  the  fact  is  the  same  with  regard  to 
every  article  ;  and,  even  then,  he  does  not  see  that  he  is  mis- 
leading himself  and  the  farmer  by  means  of  the  "fallacy 
of  division."  Farmer  A,  things  being  as  they  are,  could 
get  what  he  wants  through  wheat  somewhat  more  cheaply 
than  he  now  does ;  so  could  Farmer  B  ;  so  could  each  one 
of  the  others ;  but  they  all  of  them  together  cannot,  for  wheat 
would  fall  to  perhaps  half  its  present  price  and,  with  twice  as 


"  ARGUMENT   AGAINST   PROTECTIVE   TAXES."  3 

many  farmers,  only  a  very  small  portion  of  the  surplus  of 
wheat  would  be  salable  at  any  price.  Such  questions  are  prac- 
tical questions,  depending  upon  the  possible  foreign  demand 
and  the  population  of  the  country  in  question  ;  and  no  man 
who  carefully  considers  the  subject,  will  come  to  the  conclusion 
that  the  people  of  the  United  States,  if  confined  to  those  in- 
dustries in  which  we  have  an  advantage,  could  produce  any- 
thing like  the  gross  annual  exchangeable  value  they  are  now 
producing.  Here  it  may  be  urged  that  when  farming  ceased 
to  be  profitable,  the  other  industries  would  establish  them- 
selves naturally  and  healthfully  by  the  action  of  individual 
interests  ;  but  this  assumption  was  disposed  of  fifty  years  ago 
by  John  Rae.* 

In  his  opening  paragraph  Professor  Sumner  shows  very  cor- 
rectly that  it  is  absurd  to  say  that  free  trade  may  be  good 
in  theory  but  not  in  practice.  Theory  must  be  competent 
to  explain  observed  facts,  or  it  is  no  true  theory ;  or  at  all 
events  lies  under  grievous  suspicion  of  being  faulty  in  some 
undiscovered  point.  Professor  Sumner  reads  it  the  other 
way,  namely,  that  no  one  can  be  sure  of  facts  unless  he  be  able 
to  disentangle  every  train  of  argumentation,  claiming  to  be 
theory,  which  seems  to  contradict  the  facts  or  show  them 
to  be  impossible.  Adam  Smith,  more  than  a  hundred  years 
ago,  argued  thus:  — 

"  The  general  industry  of  the  society  never  can  exceed  what  the 
capital  of  the  society  can  employ.  As  the  number  of  workmen  that 
can  be  kept  in  employment  by  every  particular  person  must  bear 
a  certain  proportion  to  his  capital,  so  the  number  of  those  that  can 
be  continually  employed  by  all  the  members /)f  a  great  society  must 
bear  a  certain  proportion  to  the  whole  capital  of  that  society,  and 
never  can  exceed  that  proportion.     No  regulation  of  commerce  can 

*  Rae  shows  very  conclusively  that  an  individual  acting  wisely  for  his  own 
interests  could  never  undertake  the  introduction  ot  foreign  arts  except  in  the 
very  rare  cases  where,  with  assistance,  such  arts  might  have  been  domesticated 
with  advantage  at  a  much  earlier  date. 

Besides,  it  seems  certainly  wiser  to  gain  the  foreign  arts  by  a  system  which 
keeps  agriculture  profitable,  than  to  wait  until  stern  necessity  forces  the  ruined 
farmer  to  betake  himself  to  other  euiploymeuls. 


4  EEVIEW   OF   PROFESSOR   SUMNER'S 

increase  the  quantity  of  industry  in  any  society  beyond  what  its  capital 
can  maintj^in.  It  can  only  divert  a  part  of  it  into  a  direction  into 
which  it  might  not  otherwise  have  gone ;  and  it  is  by  no  means  cer- 
tain that  this  artificial  direction  is  likely  to  be  more  advantageous 
to  the  society  than  that  into  which  it  would  have  gone  of  its  own 
accord." 

Thirty  years  ago  Mr.  John  Stuart  Mill  repeated  this  argu- 
ment, with  variations,  thus :  — 

"  There  can  be  no  more  industry  than  is  supplied  with  materials 
to  work  up  and  food  to  eat.  Self-evident  as  the  thing  is,  it  is  often 
forgotten  that  the  people  of  a  country  are  maintained  and  have 
their  wants  supplied,  not  by  the  produce  of  present  labor  but  of  past. 
They  consume  what  has  been  produced,  not  what  is  about  to  be  pro- 
duced. Now  of  what  has  been  produced,  a  part  only  has  been  allotted 
to  the  support  of  productive  labor;  and  there  will  not  and  cannc.t 
be  more  of  that  labor  than  the  portions  so  allotted  (which  is  the 
capital  of  the  country)  can  feed  and  provide  with  the  materials  of 
production." 

"  Yet,  in  disregard  of  a  fact  so  evident,  it  long  continued  to  be  be- 
lieved that  laws  and  governments,  without  creating  capital,  could 
create  labor." 

In  the  article  under  review,  Professor  Sumner  repeats  and 
varies  the  argument  thus :  — 

"  Any  favor  or  encouragement  which  the  protective  system  exerts 
on  one  group  of  its  population  must  be  won  by  an  equivalent  oppres- 
sion exerted  on  some  other  group.  To  suppose  the  contrary  is  to  deny 
the  most  obvious  application  of  the  conservation  of  energy  to  economic 
forces.  If  the  legislation  did  not  simply  transfer  capital  it  would  have 
to  create  capital  out  of  nothing.  Now  the  transfer  is  not  simply  an  equal 
redistribution ;  there  is  loss  and  waste  in  the  case  of  any  tax  whatso- 
ever. There  is  especial  loss  and  waste  in  the  case  of  a  protective  tax. 
We  cannot  collect  taxes  and  redistribute  them  without  loss ;  much 
less  can  we  produce  forced  monopolies  and  distorted  industrial  relations 
without  loss." 

This  is  the  theory  which  has,  for  one  hundred  and  thirty 
years,  deterred  men  from  trusting  either  their  eyes  and  ears,  or 


"  ARGUMENT   AGAINST   PROTECTIVE   TAXES.'*  5 

that  intuitive  reason  which  conducts  nine  tenths  of  human 
affairs.  Let  us  examine  the  reasoning.  First,  capi talis  defined 
to  be  those  funds  allotted  to  the  support  of  productive  labor; 
then  it  is  said  that  there  cannot  be  more  industry  than  this 
capital  can  support.  These  two  propositions  together  affirm, 
then,  that  industry  never  can  be  greater  than  it  can  be,  —  an 
identical  proposition,  which  nobody  can  deny  to  the  end  of  time, 
but  which  does  not  and  cannot  convey  any  information  what- 
soe\  jr.  It  leaves  the  whole  question  still  unsolved  before  us. 
It  IS  very  true  that  the  industry  of  the  society  cannot 
be  greater  than  its  capital,  real  and  potential,  can  support ; 
but  what  we  are  concerned  to  know  is  whether  the  industry 
of  the  society  cannot  be  greater  than  its  capital  does  support. 
If  the  normal  condition  of  an  industrial  community  be  one 
in  which  a  considerable  portion  of  its  capital  is  locked  up  in 
unsold  goods,  in  which  there  are  large  amounts  also  capable 
of  being  turned  on  the  instant  from  unproductive  to  produc- 
tive purposes,  then  a  protective  law  will  find  ample  means 
for  the  inauguration  of  its  new  industry. 

To  Adam  Smith's  argument  above  quoted  it  has  been 
replied  that  — 

The  number  of  workmen  that  can  be  kept  in  employment 
by  any  particular  individual  does  not  bear  a  certain  pro- 
portion to  his  capital.  When  the  market  for  his  products 
is  dull,  a  large  part  of  his  capital  is  locked  up  in  unsold 
goods ;  he  must  then  lessen  his  production  and  dismiss  some 
of  his  workmen  ;  and  the  same  is  true  of  society  taken  all  to- 
gether. In  a  normal  condition  of  things  there  may  be,  for 
instance,  a  stock  of  goods  equal  to  two  months'  consumption 
of  the  whole  community,  —  a  value  in  the  United  States 
at  the  present  time  (1881)  considerably  exceeding  one  thou- 
sand millions  of  dollars  ;  and  observe  that  these  stocks  of  com- 
modities are  the  very  things  —  the  food,  the  raiment,  the  tools, 
&c. —  which  are  requisite,  and  in  fact  used,  in  carrying  out 
new  undertakings  ;  and,  besides  these,  there  are  also  immense 
sums  lying  in  the  banks  awaiting  investment.  The  proposition, 
then,  that  industry  never  can  exceed  what  the  capital  of  the 
society  can  support,  is  totally  irrelevant.     It  never  c^n,  for 


6  REVIEW   OF   PROFESSOR    SUMNER  S 

any  considerable  time,  be  nearly  as  great  as  the  capital  can 
support ;  for,  if  it  were,  there  would  be  no  stock  of  commod- 
ities, and  this  would  cause  such  high  prices  and  such  high 
rates  of  interest  as  must  check  consumption  on  the  one  hand, 
and  quicken  production  on  the  other. 

One  half  of  the  capital  normally  unemployed  is  ample  for 
the  inauguration  of  gigantic  enterprises  ;  and  these,  if  within 
the  strength  of  the  community,  will  not  prevent  anything 
being  done  which  would  otherwise  have  been  done.  On  the 
contrary,  the  previously  existing  industries  will  be  stimulated 
to  larger  production. 

Let  us  suppose  that  the  United  States  at  the  end  of  1879 
was  producing  and  consuming  commodities  equal  to  a  value 
of  six  thousand  millions  for  the  year,  with  a  surplus  stock 
equal  to  the  value  of  one  thousand  millions.  The  bank  de- 
posits of  money  are  known  to  exceed  one  thousand  millions. 
If,  at  that  time,  they  commenced  forming  new  instruments 
(mills,  forges,  farms,  houses,  railroads,  &c.)  to  the  annual 
value  of  three  hundred  millions  over  and  beyond  the  regular 
and  normal  movement,  there  would  be,  as  we  see,  one  thousand 
millions  of  unemployed  floating  capital,  and  immense  moneyed 
reserves,  to  answer  to  the  subscribed  funds ;  but  these 
subscriptions  would  go  to  recompense  the  producers  of  the 
new  instruments,  and  would  be  by  them  expended,  for  the 
most  part,  for  commodities,  —  thus  relieving  the  capitalists  of 
a  portion  of  their  stocks,  and  placing  them  in  a  position 
to  employ  more  labor  for  the  sake  of  enlarging  their  produc- 
tion of  commodities.  But  whatever  they  thus  expended 
in  labor  would  lead  to  the  production  of  more  than  twice 
the  value  expended  in  labor,  as  is  shown  by  the  returns  of  the 
census  of  1870.  This  gives  the  total  value  added  to  materials 
by  the  manufacturing  and  mechanical  industries  of  the 
United  States  as  1,744  millions,  of  which  776  millions  went 
directly  to  labor.  It  might  well,  then,  have  happened  that 
at  the  end  of  1880  the  gap  made  in  the  stock  of  unemployed 
floating  capital  was  quite  repaired,  and  the  country  as  ready 
to  continue  a  similar  movement  in  1881  as  it  was  to  com- 
mence it  a  year  before.     Meanwhile  the  extra  recompense 


"  ARGUMENT   AGAINST   PROTECTIVE   TAXES."  7 

to  labor  during  the  year  might  have  been  not  less  than  six 
hundred  millions. 

Vary  the  amounts  as  you  please,  but  you  will  find  that 
any  new  enterprise,  not  out  of  proportion  to  the  existing  sur- 
plus stock  of  commodities,  will  result,  first,  in  an  enlarged 
employment  of  laborers ;  and  second,  in  the  creation  of  new 
subsidiary  capital, —  or,  say  rather,  of  new  instruments  of  pro- 
duction, which  would  not  otherwise  have  come  into  exist- 
ence. But  a  free-trader  may  ask:  How  do  you  know  that 
there  is  any  surplus  stock  of  commodities  ?  And  we  should 
reply  that,  in  the  first  place,  we  know  it  as  a  matter  of  fact, 
which  can  be  verified  in  State  Street  any  day  when  produc- 
tion and  consumption  are  in  their  normal  condition.  But, 
as  our  free-trade  brethren  do  not  like  facts,  nor  believe 
in  them  unless  they  agree  with  conclusions  deduced  from 
postulates  admitted  by  their  own  authors,  we  will  try  to  show 
that  in  an  industrial  community  there  must  be  normally 
a  stock  of  commodities  or  of  unemployed  capital. 

First,  then,  take  Industry  A.  Those  who  commenced  it 
did  so  for  the  sake  of  profit.  But  so  long  as  they  obtained 
a  satisfactory  profit,  the  same  motive  would  lead  them  to  en- 
large their  production.  If  one  man  did  not,  another  would ; 
and  so  the  increase  of  the  industry  would  go  on  until  it  over- 
ran the  demand.  A  stock  would  then  accumulate^  bringing 
down  profits  and  locking  up  a  portion  of  the  producers' 
capital  at  the  same  moment.  But  what  is  true  of  Industry 
A,  is  true  of  B,  C,  D,  &c. ;  and  we  thus  arrive  at  the  conclu- 
sion that  each  carries  along  a  surplus  stock.  When  this 
stock  is  diminished  by  a  novel  or  increased  demand,  prices 
rise ;  when  the  stock  is  increased,  prices  fall,  and  the  indus- 
try is  checked. 

No  economist,  as  far  as  we  know,  has  noticed  the  vast 
aggregate  of  these  stocks,  nor  the  manner  in  which  they 
regulate  the  play  of  the  industrial  forces ;  and  yet,  without 
knowing  about  them,  it  is  impossible  to  understand  what 
happens  upon  the  commencement  of  a  great  war  or  of  a  great 
industrial  movement.  When  we  have  ascertained  what  the 
ordinary  average  stock  is,  whether  equal  to  two,  three,  or  more 


8  REVIEW   OF    PROFESSOR   SUMNER  S 

months'  consumption,  it  may  become  possible  to  form  a 
rational  opinion  as  to  how  far  any  industrial  movement  can 
be  pushed  without  bringing  on  a  scarcity  of  floating  capital 
and  a  stringency  in  the  money  market ;  but,  meanwhile, 
it  is  something  to  have  satisfied  ourselves  that  such  stocks 
must  and  do  exist,  and  that  systems  framed  in  ignorance  or 
disregard  of  them  are  necessarily  erroneous. 

Such  a  system  is  that  of  Adam  Smith  in  his  third  para- 
graph above  quoted.  He  starts  with  the  self-evident  axiom 
that  "  the  general  industry  of  the  society  never  can  exceed 
what  the  capital  of  the  society  can  employ."  He  then  repeats 
the  idea,  in  different  words,  three  several  times ;  and  then, 
mistaking  apparently  this  rhetorical  artifice  for  logic,  he 
draws  his  conclusion  that  "  a  regulation  of  commerce  can 
onl}^  divert  a  portion  of  the  capital  of  the  society  into  direc- 
tions into  which  it  might  not. otherwise  have  gone."  This 
conclusion  will  follow  from  his  axiom  whenever  an  industrial 
community  shall  be  found  in  which  there  exists  no  unem- 
ployed capital,  and  no  funds,  which,  though  originally  in- 
tended for  private  expenditure,  are  capable  of  being  diverted 
to  the  support  of  productive  labor,  the  moment  a  protective 
larW  affords  a  sufficient  motive  for  doing  so. 

Professor  Sumner's  argument  appears  to  be  only  a  varia- 
tion of  that  of  Adam  Smith  and  Mr.  J.  S.  Mill.  He  urges 
that  if  a  law  can  do  anything  more  than  transfer,  to  the  pro- 
tected industry,  capital  that  was  or  would  have  been  applied 
to  some  of  the  old  industries,  then  the  law  must  create  capital 
out  of  nothing. 

This  would  be  true  if  in  civilized  communities  there  were 
no  capital  seeking  investment  (a  portion  of  the  one  thoiisand 
millions  of  bank  deposits),  and  no  capital  locked  up  in  com- 
modities awaiting  a  demand,  or  materials  delayed  in  conver- 
sion into  commodities  on  account  of  the  dulness  of  the  de- 
mand ;  but  it  would  seem  to  be  untrue  in  the  actual  world 
we  live  in. 

I  respectfully  invite  Professor  Sumner  to  examine  this 
matter  to  the  bottom,  and  see  whether,  in  his  theory,  he  does 
not  overlook  facts  which,  when  taken  into  account,  will  neces- 


*'  ARGUMENT    AGAINST   PROTECTIVE   TAXES."  9 

sitate  another  and  very  different  theory.  It  is  true  that  the 
argumentation  on  which  his  theory  is  built  has  stood  more 
than  a  century  without  being  picked  to  pieces ;  but  the  doc- 
trine that  the  world  was  flat  stood  a  great  many  centuries. 
The  antiquity  of  an  argumentation,  the  fact  that  it  had  been 
found  satisfactory  by  three  or  four  generations,  was  sufficient 
to  warrant  its  acceptance  by  a  teacher  and  its  communica- 
tion to  pupils  ;  but  if  it  has  been  shown  to  be  erroneous, 
both  it  and  its  corollaries  ought  surely  to  be  abandoned 
forthwith. 

The  writer  has  no  pecuniary  bias  in  this  matter,  and  no 
desire  except  to  arrive  at  the  truth  ;  and  he  abhors,  as  much 
as  Professor  Sumner  can,  whatever  is  mystical,  misty,  indis- 
tinct, —  everything  in  short  which  will  not  stand  the  test  of 
the  most  minute  and  searching  examination. 

This  leads  me  to  object  (without  any  disrespect  to  Pro- 
fessor Sumner)  to  such  sentences  as  the  following  : — - 

"  "We  cannot  collect  taxes  and  redistribute  them  without  loss ;  much 
less  can  we  produce  forced  monopolies  and  distorted  industrial  rela- 
tions without  loss." 

Such  words  appear  to  me  to  mislead  both  writer  and 
reader.  They  assume  that  under  the  regime  of  free  compe- 
tition in  a  nation  of  fifty  millions  there  can  be  monopolies,  and 
they  assume  that  industrial  relations,  different  from  what 
would  arise  by  themselves,  are  productive  of  national  loss ; 
and  these  assumptions  appear  to  me  to  take  for  granted  the 
doctrines  of  free  trade,  which  are  the  very  things  under 
discussion. 

Again,  Professor  Sumner  remarks  that  — 

"  The  notion  that  the  Legislature  hns  a  wisdom  greater  than  that  of 
the  people,  and  can  point  out  the  industries  they  ought  to  pursue,  has 
been  often  refuted;  but  the  protective  theory  assumes  more  than  that; 
it  assumes  that  the  law  can  enlighten  the  desire  for  profit,  and  make 
it  a  more  trustworthy  guide  than  it  would  be  under  freedom." 

Bat  the  question  does  not  seem  to  be  whether  the  Legis- 
lature has  greater  wisdom  than  the  people,  but  whether  the 


10  REVIEW   OF    PROFESSOR   SUMNER'S 

untrammelled  action  of  each  individual  necessarily  produces 
the  best  possible  result, — such  as  cannot  be  improved  by  the 
collective  wisdom ;  whether,  in  short,  in  this  one  field  of 
human  affairs,  judgment  and  observation  and  study  are 
utterly  impotent  lo  improve  the  accidental  or,  if  you  please, 
the  natural  course  of  events.  I  am  not  aware  that  the 
opinion  that  the  collective  action  of  the  whole  nation  may 
produce  advantageous  results  has  been  often  or  ever  refuted. 
The  most  persuasive  argument  in  favor  of  a  negative  decision, 
that  I  have  seen,  is  contained  in  the  Enquiry  into  the  Nature 
and  Causes  of  the  Wealth  of  Nations,  Book  IV.  chap.  11, 
§  4,  et  seq.,  and  it  is  very  persuasive ;  but  if  Professor  Sum- 
ner will  examine  it  narrowly,  and  apply  to  it  the  logic  which 
the  article  under  review  shows  him  to  be  master  of,  he  will 
see  the  supposed  demonstration  crumble  to  pieces.  To 
examine  it  in  this  article  would  exceed  the  limits  of  space 
and  the  patience  of  readers.  Protection  does  not,  I  think, 
presume  to  enlighten  the  desire  for  profit,  but  only  to  place 
within  the  reach  of  unoccupied  capital  and  labor  an  addi- 
tional field  of  employment  which  they  can  take  possession  of 
with  benefit  to  the  zvhole  community. 

In  the  foregoing  I  have  endeavored  to  show  where  and 
how  protection  exerts  an  effect  on  production,  to  increase  it. 
I  must  now  ask  the  indulgence  of  the  reader,  and  of  Professor 
Sumner,  while  I  endeavor  to  show  where  and  how  free  trade 
may  exert  an  effect  on  production,  to  diminish  it. 

Let  us  take  the  three  industries  of  cottons,  woollens,  and 
iron,  and  let  us  suppose,  for  the  sake  of  illustration,  that 
their  aggregate  product  sells  for  one  thousand  millions  ;  and 
let  us  farther  suppose,  for  the  sake  of  illustration,  that  the  same 
products  could  be  purchased  abroad  for  seven  hundred  mil- 
lions. The  gross  annual  product  of  the  United  States  I  find 
set  down  in  a  Free-Trade  Book,  "  The  Balance  Sheet  of 
Nations,"  at  ,£1,400,000,000  sterling,  or  say  seven  thousand 
millions  of  dollars,  which  appears  to  be  not  an  unreasonable 
estimate. 

It  would  seem  that  this  seven  thousand  millions  must  pay  all 
rents,  all  profits,  all  wages  ;  must  pay  all  productive  laborers, 


"  ARGUMENT    AGAINST   PROTECTIVE   TAXES."  H 

so-called,  and  all  recipients  of  salaries,  fees,  or  wages  for  ser- 
vices which  do  not  issue  either  in  commodities  or  in  instru- 
ments of  production.  It  would  seem  that  the  proportion  of 
the  gross  product  which  would  fall  to  any  capitalist  for  the  use 
of  his  particular  instrument  of  production,  or  which  would  fall 
to  any  salaried  man  for  the  services  he  renders,  must  depend 
upon  supply  and  demand ;  e.  g.  upon  the  number  of  per- 
sons offering  to  give  instruction,  compared  with  the  demand 
of  the  community  for  that  much-honored  service.  Let  us  call 
the  share  of  the  gross  product  falling  to  any  one,  X.  Now  in 
the  cases  of  the  instructor,  the  clergyman,  the  lawyer,  the 
physician,  or  any  other  recipient  of  fees  or  salaries,  it  would 
seem  that  they  must  be  benefited  by  the  drawing  off,  into  tiie 
cotton,  woollen,  and  iron  industries,  of  a  multitude  of  men  who 
would  otherwise  be  pressing  into  the  professions.  It  would 
seem  that  for  each  person  in  those  professions  the  share  repre- 
sented by  X  must  be  greater  by  reason  of  the  existence  of 
those  industries,  unless,  upon  their  suppression,  an  equal  field 
would  be  found  for  that  class  of  persons. 

But  the  three  industries  in  question  produce  (by  the  sup- 
position) one  thousand  millions,  or  one  seventh  part  of  the 
total  annual  product ;  that  is,  they  support  something  over 
seven  millions  of  people.  Every  dollar  gets  into  the  hands  of 
either  the  producers  of  commodities  and  instruments  of  pro- 
duction (capital),  or  else  into  the  hands  of  those  who  render 
services  —  every  dollar,  save  and  except  the  comparatively 
small  sum  expended  for  foreign  products.  Substantially,  the 
whole  one  thousand  millions  are  expended  for  other  American 
products  and  services,  and  the  amount  expended  for  services 
would  be  again  expended  for  commodities  or  for  capital ;  so 
that  in  the  end  the  thousand  millions  of  those  three  indus- 
tries would  be  paid  for  by  one  thousand  millions  of  other 
American  products. 

But,  by  the  supposition,  seven  hundred  millions  of  the  other 
American  products  would,  at  present  prices,  procure,  if  sent 
abroad,  the  same  amount  of  cottons  and  woollens  and  iron  now 
enjoyed  and  consumed.  Suppress  the  cotton  and  woollen  and 
iron  industries  and  —  if  the   exchangeable  value   of  our  own 


12  REVIEW   OF   PROFESSOR   SUMNER'S 

products  remained  undiminished  when  offered  abroad  in  such 
greater  quantities,  and  if  also  the  exchangeable  value  of  foreign 
cottons,  woollens^  and  iron  remained  unenhanced  when  called 
for  in  such  great  quantities  —  we  should  thereafter  get  the  cot- 
tons and  woollens  and  iron  as  much  as  we  now  get  them,  but 
the  seven  millions  of  people,  supported  directly  and  indirectly 
by  the  three  industries,  would  be  without  means  of  support ; 
they  would  then  have,  as  Mr.  Mill  expresses  it,  either  to  go 
without  food  and  necessaries,  or  squeeze  them  by  competition 
from  the  shares  of  other  laborers. 

But,  to  bring  about  even  this  result,  we  have  had  to  sup- 
pose that  the  addition  of  seven  hundred  millions  (to  our  pres- 
ent export  of  eight  oi'nine  hundred  millions)  would  not  depress 
the  exchangeable  value  of  the  whole.  If  it  did  depress  it,  even 
fifteen  per  cent,  then  our  cottons  and  woollens  and  iron  would 
cost  as  much  as  now,  and  leave  us  our  seven  millions  of  unoccu- 
pied people  besides  ;  and,  if  the  foreign  iron  and  woollens  and 
cottons  advanced  in  exchangeable  value,  we  should  be  worse 
off  still.  But  it  has  been  urged  that  the  seven  millions,  or 
those  who  support  the  seven  millions,  would  find  occupation 
about  "  something  else  —  "  that  they  would  build  houses  and 
wagons^  &c. ;  but  the  effective  demand  of  the  community  for 
houses  and  wagons,  &c.,  will,  by  supposition,  be  diminished  by 
the  seven  hundred  millions  sent  abroad  to  buy  cottons  and 
woollens  and  iron  before  made  at  home  ;  and,  although  houses 
and  wagons  "  are  never  imported,"  their  exchangeable  value 
depends  upon  the  effective  demand. 

Let  us  now  try  again  to  imagine  how  salaried  men  would  be 
affected  by  the  suppression  of  the  tliree  industries  in  ques- 
tion. Evidently  the  educated  men,  now  employed  in  and 
about  those  industries,  would  become  competitors  over  and 
above  those  now  competing  for  pulpits,  professorships,  seats 
upon  the  bench,  and  other  dignified  occupations  yielding 
salaries.  The  X  representing  any  particular  salary  must 
then,  after  a  while,  come  to  be  a  smaller  proportion  of  the  total 
annual  product  available  for  home  consumption,  as  already 
observed  ;  and  this  last  being,  by  the  supposition,  reduced  by 
the  one  tenth  part  sent  abroad,  the  particular  salary  would 


"  ARGUMENT   AGAINST    PROTECTIVE   TAXES."  13 

soon  come  to  be  not  only  a  diminished  proportion  of  the 
previous  annual  product,  but  a  diminished  proportion  of 
nine  tenths  of  the  previous  product.  In  short,  less  being 
produced  in  the  country,  there  would  be  less  to  divide  between 
rent,  profits,  and  wages. 

It  is  only  a  couple  of  weeks  since  I  became  aware  that 
Professor  Sumner  had  published  in  March  the  article  now 
under  review ;  and  the  present  paper  has  been  written  in 
response  to  his  request  conveyed  in  the  following  sen- 
tence :  — 

"  If  this  be  not  so,  let  some  protectionist  analyze  the  operation  of 
his  system,  and  show,  by  reference  to  undisputed  economical  principles, 
where  and  how  it  exerts  any  effect  on  production  to  increase  it." 

In  return  I  have  only  to  request  that,  if  this  paper  has  not 
didy  met  his  requisition,  he  will  point  out  with  precision 
exactly  where  and  how  it  is  erroneous  or  defective.  The  sub- 
ject is  one  of  tremendous  importance,  and  there  are  thousands 
of  honest  and  intelligent  men  who  desire  to  be  shown  exactly 
what  is  and  what  is  not  true  with  regard  to  it. 

I  have  endeavored  to  avoid  all  side  issues,  and  to  go  direct 
to  the  chief  point  in  which  the  scholastic  political  economy 
appears  to  be  erroneous.  This  is  a  small  matter,  indeed,  when 
once  pointed  out ;  but  it  has  been  nevertheless  sufficient  to 
paralyze  the  keen  intellects  of  its  professors,  sufficient  to 
prevent  their  improving  political  economy  into  a  real  science, 
and  sufficient  to  force  them  to  conclusions  the  reverse  of 
those  drawn  by  the  practical  man  from  the  industrial  phe- 
nomena which  he  is  obliged  every  day  and  hour  to  interpret, 
under  the  penalty  of  ruin  if  he  fail  to  interpret  correctly. 

George  Basil  Dixwell. 


REYIEW 

Of  an  article  hy  Prof.  Arthur  L.  Perry,  Williams  College,  Williamstown, 
Mass.,  in  the  Journal  of  the  American  Agricultural  Association  for  Juty 
and  October,  1881,  entitled,  — 

"  Farmers  and  the  Tariff." 


Professor  Perry  states  substantially  as  follows  (his  state- 
ments being  merely  condensed)  that  — 

"  the  war  of  the  American  Revolution  was  waged  mainly  in  the  in- 
terests of  a  free  trade ;  that  one  of  the  first  acts  of  the  thirteen  colo- 
nies, April  G,  1776,  was  to  establish  free  trade,  which  substantially 
continued  until  the  present  government  was  established  in  1789  ;  that 
no  ill  effects  followed,  and  that  the  country  was  not  flooded  at  that 
time  with  the  cheap  goods  of  foreigners,  because  the  only  way  that  can 
be  brought  about  is  for  the  natives  to  flood  the  foreigners  with  cheap 
native  goods  in  exchange.  In  1789  shrewd  members  of  the  first  Con- 
gress, mostly  from  New  England,  at  the  instance  and  under  the  pres- 
sure of  certain  men  who  thought  thereby  to  raise  the  price  artificially 
of  their  own  special  home  products,  by  means  of  lobbying  and  log- 
rolling, caused  to  pass  the  first  tariff  bill,  of  which  the  preamble  was  : 
'  Whereas,  it  is  necessary  for  the  support  of  the  Government,  for  the 
discharge  o^  the  debts  of  the  United  States,  and  the  encouragement 
and  protection  of  manufactures,  that  duties  be  laid,'  and  so  on.  The 
duties  were  low,  but  they  introduced  a  false  principle,  —  that  a  man's 
neighbors  may  be  taxed  indefinitely  to  hire  him  to  carry  on  an  alleged 
unprofitable  business;  and  this  utterly  false  principle  has  brought  on 
the  protective  system,  which  has  grown  so  unjust,  onerous,  and  abomi- 
nable that  no  other  free  people  would  submit  for  a  single  year.  ■  Jt 
was  well  understood  in  1789  that  this  system  would  be  hostile  to  tho 
interest  of  the  farmers  as  such ;  the  fallacy  that  a  home  market  in 
some  mysterious  way  compensates  the  farmers  was  not  then  invented, 
and  can  now  be  exploded  by  a  few  words.  These  words  are  :  '  Unless 
it  can  be  shown  that  protection  —  that  is  to  say,  rcstrictiou  — increases 


2  REVIEW    OF    PROFESSOR    PERRY  3 

the  number  of  births  or  diminishes  the  number  of  deaths,  it  is  in  vain 
to  claim  that  there  are  any  more  mouths  to  be  fed  by  the  farmers 
than  there  would  be  under  freedom.' 

"  Fisher  Ames  said  in  1789  :  '  From  the  different  situation  of  man- 
ufacturers in  Europe  and  America,  encouragement  is  necessary.  In 
Europe  the  artisan  is  driven  to  labor  for  his  bread.  Stern  Necessity 
with  her  iron  rod  compels  his  exertion.  In  America,  invitation  and 
encouragement  are  needed.  Without  them  the  infant  manufacture 
droops,  and  those  who  might  be  employed  in  it  seek  with  success  a 
comi^etency  from  our  cheap  and  fertile  soil.' 

"  This  lets  the  protectionist  cat  right  out  of  her  bag.  Our  people 
are  not  poor  enough,  and  never  were,  to  carry  on  unprofitable  branches 
of  industry  to  support  which  the  whole  community  has  to  be  taxed, 
and  particularly  the  agricultural  classes.  What  then  is  to  be  done  ? 
Why,  drag  down  agriculture  by  abominable  taxes  to  the  level  of  the 
alleged  unprofitable  infant  manufactures.  '  Protection  assumed  at 
the  outset,  and  has  maintained  to  this  day,  an  attitude  of  unceasing 
hostility  to  the  tillers  of  the  soil.  Protectionist  manufacturers,  who 
are  a  mere  fraction  of  the  population,  have  cajoled  the  farmers,  who  are 
one  half  the  population,  to  consent  to  pay  for  their  supplies  prices  artifi- 
cially enhanced  by  law,  and  to  sell  their  produce  at  prices  artificially 
depressed  by  law.'  There  never  was  a  worse  delusion  than  tliis  on  the 
part  of  the  farmers,  and  there  never  was  a  worse  swindle  than  this  on 
the  part  of  the  party  of  the  other  part.  But  the  manuflicturers  as  a 
body  are  not  benefited  ;  many  of  them  lose  two  dollars  by  protection 
for  every  one  dollar  which  they  gain  ;  so  that  the  free-traders  of  this 
country  are  fighting  a  battle  in  behalf  of  the  manufacturers  them- 
selves (selfishness  is  always  short-sighted)  as  well  as  in  behalf  of  the 
farmers.  That  protective  duties  are  a  great  burden  is  shown  by  the 
fact  that  the  protectionist  manufacturers  never  like  to  pay  them  them- 
selves ;  it  seems  that  what  is  sauce  for  the  asricultural  goose  is  not 
good  for  the  protectionist  gander.  Whether  the  farmers  see  their  true 
interest  or  not  the  fact  I'emains  that  they  are  the  ass  that  bears  most 
of  the  burden  and  eats  least  of  the  hay  of  protection." 

Let  us  first  examine  tlie  historical  portion  of  this  document. 

It  is  undouI)tedly  true  that  one  object  of  the  War  of  the 
Revolution  was  to  free  the  trade  of  the  colonies  from  the  re- 
strictions which  Great  Britain  had  placed  upon  it  for  the  benefit 
of  her  own  commerce  and  manufactures.     It  was,  therefore,  in 


''  FA?.iIEUS    AND    THE    TARIFF."  3 

one  sense  waged  "  in  the  interests  of  a  free  trade."  But  it  was 
not  waged  in  the  interests  of  any  sucli  free  trade  as  Professor 
Perry  advocates,  —  a  free  trade  whicli  denies  the  right  of  a 
nation  to  place  any  restrictions  having  in  view  the  encourage- 
ment of  industries  deemed  necessary  or  useful  to  the  whole 
community.  On  the  contrary,  the  colonies  strove  for  the  riglit 
to  regulate  their  own  commerce  and  industry  as  tliey  pleased, 
and,  as  soon  as  indepenaent,  they  proceeded  to  exercise  the 
right.  It  was  found,  however,  that  the  action  of  Virginia  was 
ineffectual  without  the  co-operation  of  Maryland,  and  that 
those  two  could  not  act  effectually  without  Pennsylvania,  nor 
those  three  without  New  York,  and  so  on.  Mr.  Madison, 
writing  to  Joseph  C.  Cabell,  Sej^rt.  18, 1828,  records  these  facts, 
and  adds  in  illustration  the  following :  — 

"There  is  a  passage  in  Mr.  Necker's  work  on  the  finances  of  France 
which  affords  a  signal  ilhistration  of  the  difficulty  of  collecting  in  con- 
tiguous communities  indirect  taxes  when  not  the  same  in  all,  by  the 
violent  means  resorted  to  against  smu<j<ihn"r  from  one  to  another  of 
them.  Previous  to  the  late  revolutionary  war  in  that  country,  the 
taxes  were  of  very  different  rates  in  the  different  provinces.  .  .  .  The 
consequence  was  that  the  standing  army  of  patrols  against  smuggling 
had  swollen  to  the  number  of  twenty-three  thousand  ;  the  annual 
arrests  of  men,  women,  and  children  engaged  in  smuggling,  to  five 
thousand  five  hundred  and  fifty,  .  .  .  more  than  three  hundred  of 
whom  were  consigned  to  the  terrible  punishment  of  the  galleys." 

The  colonies,  then,  did  not  go  to  war  to  deprive  tlicmselves 
of  the  right  to  regtdate  their  own  trade  according  to  their  own 
notions  of  what  is  advantageous  to  tlie  whole  community;  and 
Professor  Perry's  labored  introduction  tends  to  produce  an  im- 
pression the  i^everse  of  what  is  true. 

But  this  is  a  trifle  to  what  follows,  when  he  says  tliat  "  no 
ill  effects  followed  this  general  liberty  to  buy  and  sell  with 
foreigners,"  &c. 

The  real  facts  are  tliat  upon  the  opening  of  the  ports,  after 
the  war,  an  immense  quantity  of  foreign  manufactui-es  was  in- 
troduced ;  and  the  people  were  tempted  by  the  sudden  cliea])- 
ness  of  imported  goods  to  purcliase  beyond  (heir  capacity  fur 


4  REVIEW   OF   PROFESSOR   PERRY  S 

payment.  The  bonds  of  men  whose  competency  to  pay  their 
debts  was  unquestionable  could  not  be  negotiated  but  at  a  dis- 
count of  thirty,  forty,  and  fifty  per  cent ;  real  property  was 
scarcely  vendible,  and  sales  of  any  article  for  ready  money 
could  only  be  made  at  a  ruinous  loss.  Property,  when  brought 
to  sale  under  execution,  sold  at  so  low  a  price  as  frequently 
to  ruin  the  debtor  without  paying  the  creditor.  A  disposition 
to  resist  the  laws  became  common.  Laws  were  passed  by 
which  property  of  every  kind  was  made  a  legal  tender  in  the 
payment  of  debts,  though  payable  according  to  contract  in  gold 
and  silver.  Other  laws  delayed  payments,  so  that  of  sums 
already  due  only  a  third,  and  afterwards  only  a  fifth,  was 
annually  recoverable  in  the  courts  of  law.  Silver  and  gold 
departed  to  pay  for  the  necessary  and  unnecessary  commodities 
imported. 

In  this  condition  of  financial  matters,  the  public  securities  fell 
to  fifteen,  twelve,  and  even  ten  cents  in  the  dollar,  ruining 
a  large  portion  of  the  warmest  friends  of  the  Revolution,  who 
had  risked  their  lives  and  embarked  their  entire  property  in  its 
support. 

In  every  part  of  the  States  the  scarcity  of  money  had- become 
a  common  subject  of  complaint,  and  the  difficulty  of  paying 
debts  had  become  so  common,  that  riots  and  combinations 
were  formed  in  many  places,  and  the  operations  of  civil  gov- 
ernment were  suspended. 

The  authorities  for  the  above  are,  Dr.  Hugh  Williamson, 
Minot's  "  History  of  the  Insurrection  in  Massachusetts,"  pp. 
2,  13 ;  Marshall's  "  Life  of  Washington,"  pp.  75,  88,  121 ; 
Ramsay's  "  South  Carolina,"  vol.  ii.  p.  428 ;  Belknap's  "  His- 
tory of  New  Hampshire,"  vol.  ii.  pp.  352,  356,  429 ;  Matthew 
Carey's  works,  and  the  "Questions  of  the  Day,"  by  Dr.  Elder. 

But  Professor  Perry  says  that  "  no  ill  effects  followed  this 
general  liberty  to  buy  and  sell  with  foreigners,"  &c. 

Let  the  reader  pause  a  moment  over  this  extraordinary  mis- 
representation. Had  it  been  made  by  one  who  was  impelled 
by  avarice  or  revenge,  there  would  be  nothing  marvellous 
about  it ;  but  here  is  a  very  difierent  case.  A  professor  in  a 
respectable  college,  the  author  of  a  treatise  on  political  economy 


"  FARMERS   AND    THE   TARIFF."  6 

said  to  be  used  in  many  universities,  a  gentleman  whose  offi- 
cial position  makes  him  a  trustee  of  the  truth  for  the  rising 
generation,  should  not  be  accused  of  wilful  untruthfulness. 
No  !  it  is  more  courteous,  more  agreeable,  and  doubtless  more 
just,  to  trace  the  misstatement  to  an  unfortunate  habit  of 
hastily  concluding  that  events  did  actually  happen  in  this  or 
that  manner,  because,  if  his  theories  be  correct,  they  must  so 
have  happened.  He  feels  perfectly  sure  of  his  doctrine  ;  and, 
such  being  the  doctrine,  the  events  must  have  been  as  stated  ; 
but,  unfortunately  for  the  deduced  history,  the  doctrine  itself 
cannot  be  maintained.  Imports  are  not  exchanged  for  ex- 
ports. Imports  are  sold  for  money,  and  the  money  is  there- 
after either  carried  abroad  or  invested  in  exports,  according 
to  circumstances ;  or  it  may  be  invested  in  Government  or 
other  securities,  and  so  run  the  country  in  debt.,  But  pajang 
in  money  or  in  securities  has  a  limit  which  is  speedily 
reached ;  and  afterwards,  imports  must  be  limited  by  the 
foreign  demand  for  exports,  even  if  this  pays  for  only  a  fifth  or 
a  tenth  of  what  the  country  could  produce  and  enjoy  through 
its  own  labor.  But  before  the  free-trade  disease  reaches  this 
chronic  stage  it  must  pass  through  the  acute  stage.  There 
are  the  export  of  treasure ;  the  contraction  of  all  values  as 
measured  by  treasure  ;  the  aggravation  of  all  debts,  public  and 
private;  forced  liquidations;  widespread  bankruptcy,  and  a 
general  diminution  of  employment  to  industry. 

The  theory  which  teaches  that  the  only  way  in  which  a 
country  can  be  flooded  with  the  cheap  goods  of  foreigners  is 
for  the  natives  to  flood  the  foreigners  with  cheap  goods  in  ex- 
change is  an  incorrect  theory  ;  and  the  history  deduced  from  it 
is  consequently  the  opposite  of  the  actual  course  of  events, —  all 
which  proves  only  what  common  sense  would  have  seen  at 
once,  namely,  that  history  should  not  be  inferred  from  theories, 
but  ascertained  by  reference  to  the  written  and  printed  records 
of  the  times. 

Another  misstatement  as  to  facts  may  be  found  in  the  alle 
gation  that  in  1789  men  had  not  yet  invented  the  theory  that 
protection  would  benefit  farmers  by  enlarging  the  homo 
market. 


6  REVIEW    OF   PEOFESSOR    PERRY  S 

111  Adam  Smith's  lectures,  afterwards  published  (in  1776) 
under  the  title  of  "  Inquiry  into  the  Nature  and  Causes  of  the 
Wealth  of  Nations,"  the  idea  of  the  great  advantage  of  the  home 
market  crops  out  frequently,  and  may  be  found  more  particu- 
larly in  bk.  iv.  chap,  ix.,  last  paragraph  but  four,  where  he 
says :  — 

"  Whatever,  then,  tends  to  diminish  in  any  country  the  number  of 
artificers  and  manufacturers  tends  to  diminish  the  home  market,  —  the 
most  important  of  all  markets  for  the  rude  produce  of  the  land." 

The  same  idea  appears  frequently  in  Alexander  Hamilton's 
"writings.     He  says :  — 

"  There  appear  strong  reasons  to  regard  the  foreign  demand  for 
that  (agricultural)  surplus  as  too  uncertain  a  reliance,  and  to  desire  a 
substitute  for  it  in  an  extensive  domestic  market. 

"  To  secui-e  such  a  market  there  is  no  other  expedient  than  to  pro- 
mote manufacturing  establishments.  Manufacturers,  who  constitute 
the  most  numerous  class  after  the  cultivators  of  the  land,  are  for  that 
reason  the  principal  consumers  of  the  surplus  of  their  labor. 

"The  idea  of  an  extensive  domestic  market  for  the  surplus  prod- 
uct of  the  soil  is  of  the  first  consequence.  It  is,  of  all  things,  that 
which  most  effectually  conduces  to  a  flourishing  state  of  agriculture." 

Benjamin  Franklin,  writing  home  from  London  in  1771, 
says  :  — 

"  Every  manufjicturer  encouraged  in  a  country  makes  part  of  a  home 
market  for  provisions  among  ourselves,  and  saves  so  much  money  to 
the  country  as  must  otherwise  be  exported  to  pay  for  the  manufac- 
tures he  supplies.  Here  in  England  it  is  well  known  that  wdierever  a 
manufacture  is  established  which  employs  a  number  of  hands,  it  raises 
the  value  of  land  in  the  country  all  around  it.  It  seems,  therefore,  the 
interest  of  our  farmers  and  owners  of  land  to  encourage  our  young 
manufactures  in  preference  to  foreign  ones." 

Professor  Perry  says  tliat  this  doctrine,  which  he  calls  a 
fallacy,  liad  not  been  invented  in  1789 !  The  reader  will  see 
that  he  is  here  again  in  error  as  to  matters  of  fact.  The  doc- 
trine was  well  established  long  before  the  date  named,  and  has 


"  FARMERS    AND    THE    TARIFF."  7 

never  been  shaken.  It  was  reaffirmed  bj  General  Jackson  in 
his  celebrated  letter  to  Dr.  Coleman  in  1824,  and  by  Jolin 
Stuart  Mill,  in  his  Political  Economy,  thirty  years  later.  In- 
deed, it  is  nearly  self-evident ;  but  Professor  Perry  denounces  it 
as  a  fallacy  which  a  few  words  will  explode,  and  he  gives  us 
the  few  words,  which  are  :  — 

"  Unless  it  can  be  shown  that  protection  —  that  is  to  say,  restriction  — 
increases  the  number  of  births  or  diminishes  the  number  of  deaths,  it  is 
in  vain  to  claim  that  there  are  any  more  mouths  to  be  fed  by  the 
farmers  than  there  would  be  under  freedom." 

This  is  a  question  about  which  a  farmer  is  as  good  a  judge 
as  any  professor.  In  twenty-five  years  the  population  of  the 
United  States  will  be  doubled,  — it  will  be  100,000,000,  — capa- 
ble, if  all  employed  in  agriculture,  of  producing  food  and  raw 
materials  for  250,000,000  to  300,000,000  of  people.  Nowhere 
on  this  planet  are  to  be  found  the  requisite  number  of  purcha- 
sers. In  England  and  Scotland  and  Wales  the  peo[)le  (less  than 
30,000,000)  have  been  rash  enough  to  make  themselves  largely 
dependent  upon  foreign  food  ;  but  even  their  demand  is  lial)le 
to  very  great  variations.  Other  countries  pursue  the  more 
sensible  policy  of  raising  in  ordinary  seasons  enough  for  them- 
selves. 

To  repeat:  in  twenty-five  years  the  population  of  the  whole 
country  will  be  doubled ;  that  of  the  now  less  settled  portions 
will  be  increased  three,  four,  or  five  fold.  Let  the  farmer  in 
such  portions  consider  whether  he  would  prefer  the  increase  of 
population  to  be  mostly  farmers  or  mostly  people  who  buy  and 
do  not  produce  farm  products.  It  will  not  take  him  long  to 
make  up  his  mind,  and  his  judgment  will  be  wortli  as  much  as 
that  of  all  the  political  economists  in  Europe  and  America. 
His  judgment  will  agree  with  the  mature  and  dcliljcrate  oi)inion 
of  such  men  as  Franklin,  Hamilton,  Jefferson,  Andrew  Jackson, 
Henry  Clay,  Daniel  Webster,  and  the  majority  of  the  great 
statesmen  who  have  been  the  pride  of  our  country. 

The  article  now  under  review  contains  two  argunuMitations 
which  it  may  be  well  to  examine,  coming  as  they  do  from  a 
noted  political  economist. 


8  REVIEW    OF   PROFESSOR   PERRY'S 

The  first  is  in  favor  of  free  trade.     It  runs  thus  :  — 

"  Free  trade  does  not  compel  anybody  to  trade ;  it  does  not  even 
recommend  anybody  to  trade  ;  it  merely  allows  those  persons  to  trade 
who  find  it  for  their  profit  to  do  so.  Unless  it  be  profitable  for  them 
to  trade  they  will  not  trade.     They  have  no  motive  to  trade." 

The  original  free-trade  argument  (by  Adam  Smith)  went 
farther,  and  maintained  not  only  that  each  individual  knew  his 
own  interest  (both  immediate  and  permanent)  better  than  any 
statesman  or  law-giver  could,  but  also  that  what  the  individual 
elected  to  do  must  necessarily  be  that  which  best  promoted  the 
national  wealth.  These  extravagant  propositions  were  re- 
peatedly shown  to  be  untenable,  were  abandoned  by  Mr.  John 
Stuart  Mill,  and  are  abandoned  by  Professor  Perry,  inasmuch 
as  in  the  very  article"  now  under  review  he  maintains  that 
the  manufacturers  do  not  understand  their  own  interests,  that 
the  farmers  do  not  understand  theirs,  and  that  a  majority 
of  the  American  people  have  for  a  hundred  years  been  pursuing 
a  pernicious  and  pauperizing  policy. 

But  in  place  of  these  abandoned  positions  Professor  Perry 
gives  us  the  following :  — 

"  If  it  be  profitable  for  any  two  persons  to  trade,  and  a  law  steps  in 
to  prevent  it,  tlien  that  law  destroys  property,  interferes  with  rights, 
and  makes  the  persons  subject  to  it  so  far  forth  slaves." 

But  as  the  identity  of  individual  and  national  interests  has 
been  abundantly  disproved,  this  proposition  is  exclusively  one 
regarding  the  rights  of  property.  It  is  a  proposition  in  law  or 
in  social  science.  It  cannot  be  maintained  either  in  law  or  in 
social  science ;  but  if  it  could,  it  would  still  be  out  of  place  in 
a  discussion  as  to  whether  free  trade  or  protection  will  best 
promote  the  wealth  of  a  particular  nation.  Both  law  and 
social  science  demand  tliat  the  individual  interest  shall  give 
way  to  the  national  interest;  with  compensation,  it  is  true,  in 
same  cases,  but  not  in  those  cases  where  the  betterment  out- 
weighs the  damage.  To  suppose  that  property  confers  the 
right  to  nullify  the  social  and  economical  regime  under  which 


"  FARMERS   AND    THE    TARIFF."  9 

it  ^vas  acquired  would,  I  think,  have  astonished  Socrates  or 
any  subsequent  moralist ;  and  to  expect  that  a  discussion  of 
the  rights  of  property  will  reveal  the  secrets  of  the  nature  and 
causes  of  the  wealth  of  nations  would  equally  surprise  all 
political  economists  save  Bastiat  and  his  imitators. 

The  second  and  last  argument  which  it  will  be  necessary  to 
look  at  is  the  following :  — 

"Your  protectionist  thinks  it  is  a  very  good  thing  for  the  farmers  and 
for  the  people  generally  to  pay  protective  prices,  but  he  never  likes  to 
pay  them  himself.  He  has  no  scruple  in  evading  them,  if  he  can  do 
so  by  any  possibility.  He  denies  by  his  own  actions,  which  speak 
louder  than  words,  what  he  is  constantly  affirming  in  words,  namely, 
that  protection  is  a  good  thing." 

Let  us  test  this  method  of  reasoning.  A  just,  efficient,  and 
economical  government  gives  us  good  roads,  good  water,  safe 
buildings,  defence  against  public  and  private  violence,  and  a 
thousand  other  desirable  things ;  but  it  costs  money,  and  many 
individuals,  after  enjoying  its  benefits,  are  unwilling  to  pay 
their  proportion  of  the  expense.  They  thus  deny  by  their 
actions,  which  speak  louder  than  words,  what  they  are  con- 
stantly affirming  in  words,  namely,  that  a  just,  efficient,  and 
economical  government  is  a  good  thing. 

Again,  laws  against  cheating  and  robbing  are  generally 
thought  to  be  good ;  but  many  men,  while  they  themselves 
enjoy  protection  against  cheating  and  robbing  on  the  part  of 
others,  will  not  hesitate,  whenever  they  can,  to  cheat  and  rob ; 
thus  denying  by  actions,  which  speak  louder  than  words,  what 
they  are  constantly  affirming  in  words,  that  cheating  and  rob- 
bing ought  to  be  suppressed. 

Again,  if  the  protectionist  doctrine  be  correct,  the  American 
system  vastly  increases  the  gross  annual  product  of  the  country, 
which  pays  all  rents,  profits,  fees,  salaries,  and  wages,  which 
has  endowed  our  institutions  of  learning,  and  brought  our  pros- 
perity and  civilization  to  its  present  height.  Nevertheless,  the 
wealthier  classes  generally  keep  themselves  in  a  fever  because 
under  this  system  their  champagnes,  gloves,  ribbons,  silks, 
satius,  and  fine  broadcloths,  brought  from  abroad,  cost  much 


10  REVIEW    OP    PCOFESSOR   PERRY'S    ' 

higher  than  they  would  were  there  no  duties.  They  do  not 
like  to  pay  the  cost  of  the  prosperity  they  enjoy.  But  this 
does  not  prove  that  prosperity  is  a  bad  thing.  The  farmer 
sees  that  without  protection  he  would  have  to  go  without  three 
fourths  of  the  comforts  he  now  possesses ;  the  rich  do  not  see 
that  under  free  trade  reduced  incomes  would  compel  them  to 
forego  a  large  portion  of  their  present  luxuries.  They  deny 
the  allegation  with  emphasis  ;  but  neither  the  denial  nor  the 
emphasis  proves  anything.  The  proof  must  be  sought  from 
combined  observation  and  reasoning.  Patient  and  truthful 
search  after  facts,  patient  and  truthful  reasoning  from  them, 
patient  and  truthful  examination  and  re-examination  of  both 
facts  and  reasoning,  when  they  appear  to  disagree,  may  at  some 
future  time  build  up  a  solid  and  enduring  science  of  political 
economy.  Violence,  denunciation,  rhetoric,  fierce  onslaughts 
upon  individuals  or  classes,  vehement  appeals  to  the  short- 
sighted pocket,  will  in  no  way  assist  in  its  construction. 

Having  examined  Professor  Perry's  historical  and  logical 
methods,  we  are  in  a  position  to  form  a  correct  judgment  as  to 
the  rest  of  his  article. 

He  asserts  that  the  manufacturers  are  so  foolish  as  to  sup- 
port measures  which  do  not  benefit  them  at  all  as  a  whole 
class.  Some  of  the  shrewdest  and  most  unscrupulous  are  bene- 
fited; and  these  wicked,  selfish,  mendicant  swindlers  have 
cajoled  the  farmers  into  consenting  to  pay  for  their  supplies 
prices  artificially  enhanced  by  law,  and  selling  their  produce 
AT  prices  artificially  DEPRESSED  BY  LAW.  This  they  have  done 
by  lobbying  and  log-rolling,  —  that  is,  by  either  deceiving  or 
corrupting  a  majority  of  the  Representatives  and  Senators  in 
Congress.  A  majority  of  the  American  people  for  a  hundred 
years  have  been  either  fools  or  knaves,  or  both ;  and  the  farm- 
ers especially  are  "  the  ass  that  bears  most  of  the  burden  and 
eats  least  of  the  hay  of  protection."  The  only  pure,  patriotic, 
and  intelligent  people  in  the  country  are  the  free-traders.  No 
evil  has  ever  been  experienced  from  free  trade ;  no  good  has 
ever  come  from  protection. 

The  actual  history  from  beginning  to  end  has  been  precisely 
opposite  to  that  which  Professor  Perry  has  laid  before  us. 


"FARMERS   AND   THE   TARIFF."  11 

In  1789  it  was  well  known  to  thinking  men  that  the  steady 
and  permanent  interests  of  farmers  could  be  secured  only  by 
increasing  the  proportion  of  the  community  which  consumed 
and  did  not  produce  farm  products. 

In  the  years  immediately  preceding  1789  free  trade  had 
brought  intolerable  evils  upon  the  country  ;  and  it  was  for  this 
reason,  as  well  as  with  the  design  of  benefiting  the  farming  in- 
terest  by  adding  to  the  number  of  their  customers,  that  duties 
were  imposed  upon  imported  manufactures.  The  Napoleonic 
wars  followed  with  a  great  demand  for  our  exports,  and  then 
came  the  period  of  the  embargo  and  the  war  with  England  of 
1812-15.  During  the  period  of  non-intercourse  and  the  war 
our  manufactures  increased  greatly ;  but  after  peace  was  de- 
clared there  came  a  period  of  excessive  importations  similar  to 
that  which  followed  the  War  of  the  Eevolution.  Although 
free-traders  assert  that  "  the  only  way  a  country  can  be  flooded 
with  the  cheap  goods  of  foreigners  is  for  the  natives  to  flood 
the  foreigners  with  cheap  goods  in  exchange,"  the  facts  were 
the  reverse  of  those  deduced  from  their  theories.  In  point  of 
fact  our  country  was  flooded  with  cheap  foreign  goods  ;  in 
point  of  fact  we  did  buy  enormously  beyond  the  amount  which 
the  foreigner  would  take  pay  for  in  goods  ;  in  point  of  fact  our 
treasure  teas  exported,  and  this  (contrary  again  to  free-trade 
theories)  did  plunge  the  country  into  immeasurable  distress, 
destroying  a  vast  number  of  our  manufacturing  establishments, 
and  affecting  in  a  disastrous  manner  the  farming  interests  as 
well. 

Jt  was  then  perceived  that  the  protection  which  the  existing 
tariff  gave  to  manufactures  was  entirely  insufficient  in  times 
when  English  speculation  or  distress  threw  immense  masses 
of  goods  upon  our  shores ;  and  it  was  perceived  that  the  ruin 
brought  down  upon  every  interest  by  a  short  period  of  great 
cheapness  cost  the  country  a  hundred  times  what  it  gained  by 
the  momentary  and  illusive  advantage  of  a  low-moneyed  price. 
It  was  in  1824  that  General  Jackson  asked,  "  Where  has  the 
American  farmer  a  market  for  his  surplus  products  ?  "  and  rec- 
ommended as  a  remedy  to  draw  from  agriculture  the  super- 
abundant labor,  and  employ  it  in  machinery  and  manufactures. 


12  REVIEW   OF   PROFESSOR   PERRY's 

It  was  to  benefit  the  farmer  that  he  proposed  such  higher  duties 
as  would  make  the  other  industries  safe  in  times  of  foreign 
panics  or  periods  of  speculation.  There  would  have  been  a 
diverting  scene  had  any  one  assured  the  clear-headed  old  war- 
rior and  statesman  that  commodities  are  always  paid  for  with 
commodities,  and  that  no  harm  can  come  to  a  country  from  an 
inundation  of  foreign  goods. 

In  1833,  in  consequence  of  the  threatening  attitude  of  several 
of  the  Southern  States  which,  under  the  slavery  regime^  were 
unable  or  unwilling  to  establish  manufactures,  the  tariff  was 
reduced  ;  and  in  the  ensuing  panic  of  1837  the  lessons  of  1786 
and  1820  were  repeated,  and  it  again  became  apparent  that  the 
farmer  absolutely  required  the  custom  of  the  manufacturing  and 
mechanical  classes,  and  that  these  could  only  be  rendered  safe 
by  duties  sufficiently  high  to  prevent  foreign  competition  not 
merely  in  ordinary  times,  but  also  and  chiefly  during  periods  of 
financial  disturbance  in  England.  Any  other  policy  would 
be  as  wise  as  it  would  be  for  Holland  to  build  her  dikes  only 
high  enough  to  exclude  the  ocean  in  ordinary  weather,  pre- 
ferring occasional  submergence  to  a  somewhat  more  expensive 
security.  Nay,  it  would  not  bo  as  wise,  for  the  higher  duty 
does  not  entail  higher  prices.  These,  as  regards  such  goods 
as  concern  the  great  mass  of  the  people,  are  determined  by  in- 
ternal competition.  They  will  be  as  low  as  they  can  be  under 
the  circumstances  of  the  country,  whether  the  duty  be  forty 
per  cent  or  sixty  per  cent;  indeed,  the  higher  duty  would  be 
more  likely  to  lower  the  price  by  giving  a  greater  sense  of 
security,  and  thereby  attracting  more  capital  to  the  industry. 
I  am  not  aware  that  any  respectable  economist,  from  Adam 
Smith's  days  to  ours,  has  written  anything  which  contra- 
dicts this  proposition.  The  goods  produced  at  home  are  in 
a  few  years  much  cheaper  than  the  foreign  goods  with  duty 
added,  and  they  gradually  grow  cheaper  and  cheaper  as  skill 
and  the  increasing  use  of  machinery  more  and  more  counter- 
balance, and  in  many  cases  overcome,  the  effect  of  a  higher 
rate  of  wages  and  a  higher  rate  of  interest.  The  heavier 
cotton  goods  were  long  ago  cheaper  even  in  money  than 
they  could   be   imported,  duty  free;    and  free-trade   writers 


"farmers  and  the  tariff."  13 

allege  that  heavy  woollens  have  reached  nearly  an  equality 
in  cost  with  foreign  goods.  To  be  sure,  after  making  this 
allegation  they  state  that  the  duty  is  135  per  cent,  and  in- 
vite the  "  hod-carrier  and  the  poor  sewing-girl "  to  believe 
that  they  pay,  and  the  manufacturer  pockets,  the  135  per  cent ; 
but  everybody  knows  that  any  reasonable  prospect  of  making 
ten  per  cent  a  year  would  cause  a  hundred  millions  to  be  in- 
vested in  new  woollen  mills  ;  and  the  inference  is  unavoidable 
that  the  poor  get  their  clothing  at  what  it  costs,  and  a  pro  tit 
averaging  about  the  same  as  is  made  in  other  industries. 

In  every  industry  the  demand  occasionally  outruns  the 
power  of  production,  and  then  there  are  large  profits ;  and 
occasionally  the  power  of  production  outruns  the  demand, 
and  then  there  are  severe  losses.  The  steel  rails  of  Professor 
Perry's  article  are  in  point.  The  productive  capacity  of  Eng- 
land in  1880  was  about  one  million  tons,  and  that  of  the  United 
States  the  same,  with  the  prospect  of  reaching  a  million  and  a 
half  in  1882.  Before  steel  rails  were  made  in  this  country  the 
price  was  not  less  than  ^150  a  ton,  and  the  demand  has  so 
suddenly  outrun  the  means  of  supply,  that  the  same  price 
would  very  probal)ly  have  Leen  reached  again  had  we  depended 
upon  England.  The  present  price  in  England  is  what  answers 
to  a  demand  for  one  million  of  tons,  and  Professor  Perry  bases 
his  calculations  upon  the  assumption  that  the  price  in  Great 
Britain  would  have  been  the  same  in  the  face  of  a  demand  for 
two  millions  of  tons,  and  in  face  of  a  knowledge  that  the  Amer- 
icans could  not  make  a  ton  for  themselves !  As  it  is,  the 
manufacturers  of  steel  rails  are  making  money,  —  perhaps  a 
great  deal  of  money,  —  and  the  country  is  made  to  ring  with 
denunciations  of  the  wicked  and  deplorable  fact.  By  and  by 
they  will  be  losing  money,  and  then  the  free-trader  will  tiy^o 
gain  influence  with  them  by  urging  that  they  are  being-a-uincd 
by  the  duties  upon  iron.  But  the  country  can  console  itself  by 
the  reflection  that  whatsoever  they  make,  be  it  much  or  little, 
finds  its  way,  every  dollar  of  it  (save  and  except  what  is  spent 
upon  foreign  goods)  into  the  hands  of  the  American  workiug- 
man. 

The  observations  of  Fisher  Ames,  which  Professor  Perry 


14  REVIEW   OF   PROFESSOR   PERRY'S 

contrives  to  misunderstand,  arc  simple  enough.  They  assert 
merely  that  where  every  man  can  be  a  farmer  if  he  pleases, 
and  enjoy  the  competence  and  independence  of  that  position,  it 
is  in  vain  to  endeavor  to  form  other  classes  unless  the  condition 
of  those  other  classes  be  made  sufficiently  profitable  to  compen- 
sate them  for  leaving  their  farms  or  for  abstaining  from  taking 
farms.  On  these  conditions  we  can  have  all  that  the  whole 
community  can  produce  ;  on  any  other  terms  we  can  have  only 
the  food  and  raw  products  we  ourselves  need,  and  such  amount 
of  manufactured  articles  as  will  pay  for  what  raw  products 
foreigners  desire  to  take  from  us.  If  we  desire  a  far  greater 
value  of  their  products  than  they  desire  of  ours,  the  advantage 
we  possess  in  producing  raw  products  will  inure  entirely  to 
them  ;  and,  moreover,  we  shall  obtain  only  a  portion  —  in  our 
case  only  a  small  portion  —  of  what  we  desire,  and  shall  either 
have  large  quantities  of  food  to  be  given  to  animals  or  burned, 
or  else  be  discouraged  from  producing  more  than  a  fraction  of 
what  we  might  produce  under  wiser  arrangements.  We  should 
then  enjoy  in  some  sense  a  competency,  for  we  should  not 
starve ;  but  we  could  not  enjoy  our  present  comparative  opu- 
lence. If  any  one  doubts  this  let  him  study  Mr.  J.  S.  Mill's 
chapter  on  international  trade. 

Professor  Perry  is  an  admirer  of  Bastiat,  a  writer  who  en- 
deavored to  bolster  a  weak  cause  by  importing  into  economical 
questions  the  virulence  of  personal  and  class  abuse,  and  the 
inexhaustible  resources  of  rhetorical  inveracity  ;  a  writer,  how- 
ever, of  whose  works  one  serves  as  a  text-book  at  Harvard, 
while  another  —  the  worst  of  the  whole  —  is  recommended  to 
youth  by  the  authority  of  Yale.  According  to  Bastiat,  protec- 
tionists are  cheats,  thieves,  robbers,  swindlers,  &c.,  and  the 
denunciations  of  Professor  Perry  in  the  article  under  review 
are  of  a  similar  quality.  If  these  were  merited  it  would  be 
high  time  that  Harvard  and  Yale  and  our  other  universities 
looked  into  their  records  to  see  how  large  a  proportion  of  their 
foundations  had  been  derived  from  protectionists  ;  to  what  ex- 
tent, in  short,  they  have  been  receivers  of  stolen  goods ;  and 
they  should  lose  no  time  in  coming  to  a  solemn  resolution  to 
accept  nothing  in  future   from   so   infamous  and  polluted  a 


"  FARMERS    AND    THE    TARIFF."  15 

source  !  MeaiiTvhile,  it  would  gratify  a  natural  curiosity  if 
some  one  would  tell  us  who  were  the  wielded  and  selfish  men 
who  have  for  a  hundred  years  cajoled  the  majority  of  the 
American  people.  The  men  who  introduced  the  cotton  manu- 
facture certainly  did  not  answer  to  the  description ;  they  were 
men  with  large  heads  and  large  hearts,  many  of  them  the  sons 
of  farmers,  but  quite  able  to  comprehend  and  act  upon  the 
broadest  views  of  statesmanship.  They  were  not  wicked,  nor 
selfish,  nor  robbers,  nor  swindlers,  nor  men  who  would  cajole 
anybody.  They  engaged  in  an  enterprise  in  which  immense 
capital  was  embarked,  and  so  some  of  them  became  rich  ;  but 
no  one  can  truthfully  allege  that  they  used  their  wealth  in  a 
mean  or  selfish  manner.  As  to  this  point  Harvard  College 
can  bo  called  as  a  witness.  Certainly  no  more  weighty  witness 
could  be  summoned ;  but  this  grand  old  witness  now  testifies 
emphatically  to  the  truth  of  the  free-trade  doctrines.  How  is 
this  ?  Is  it  not  almost  conclusive  ?  By  no  means  !  It  is  a 
transient  humor.  Her  belief  was  very  different  in  1776  when 
men  were  in  earnest ;  it  was  very  different  during  the  greater 
portion  of  the  intervening  years,  and  it  will  be  different 
again  as  soon  as  it  shall  be  generally  seen  that  Great  Britain, 
through  her  commercial,  manufacturing,  and  educated  classes, 
organized  in  the  Cobden  Club,  is  assailing  our  prosperity  as 
perniciously  as  she  could  with  shot  and  shell  and  ironclads 
and  all  the  barbarity  and  devastation  of  war.  The  persistent 
pressure  of  transatlantic  condescension  will  then  cease  to 
sway  our  literary  classes  ;  and  we  shall  have  not  only  free 
farmers  and  free  working-men,  but  a  whole  population  wliich 
will  be  free  to  reason  for  themselves,  and  which  will  bestow 
upon  the  faithful  journalist,  author,  and  teacher  tlic  all-suth- 
pient  reward  of  the  sincere  and  enduring  approbation  of  his 
own  fellow-citizens. 

To  return  to  Professor  Perry's  article.     We  have  seen  — 
1st,  That  with  regard  to  the  Revolutionary  War,  it  so  states 
the  truth  as  to  lead  the  reader  inevitably  to  a  false  conclusion. 
It  does  the  same  also  witli  regard  to  the  opinions  of  Mr. 
Madison,  quoting  words  he  used,  but  failing  to  quote  tlic  ex- 
ceptions he  insisted  on. 


IQ  "  FARMERS    AND    THE    TARIFF." 

2d,  That  with  regard  to  the  effects  of  free  trade  before 
1789,  and  in  regard  to  the  time  when  the  theory  of  the  home 
market  sprang  up,  it  makes  statements  which  are  absolutely 
contradicted  by  historical  records. 

3d,  That  its  only  argumentative  portions  will  not  bear  to  be 
confronted  with  any  known  system  of  reasoning. 

4th,  That  it  speaks  with  indecorous  and  unwarrantable  con- 
tempt of  the  majority  of  the  people  and  statesmen  of  the 
United  States,  representing  that  the  manufacturers  are  too 
stupid  to  know  their  own  interests,  and  yet  are  clever  enough 
to  deceive  or  corrupt  the  statesmen  and  to  cajole  the  farmers, 
whom  it  calls  "  the  ass  that  bears  most  of  the  burden  and  eats 
least  of  the  hay  of  protection." 

6th,  That  its  incautious  author  appears  to  have  fallen  into 
these  incongruities  in  consequence  of  reasoning  which  involved 
a  doctrine  in  political  economy  long  since  obsolete,  —  the  doc- 
trine, namely,  that  the  immediate  interests  of  the  individual 
are  always  necessarily  identical  with  the  immediate  and  per- 
manent interests  of  the  community  to  which  he  belongs. 
This  doctrine  may  linger  in  the  seclusion  of  this  or  that  uni- 
versity ;  but  as  each  class  emerges,  annually,  into  the  broad 
daylight  of  actual  life,  its  members  will  quickly  discover  that 
those  who  would  be  leaders  among  men  must  possess  them- 
selyes  of  some  philosophy  which  does  not  flatly  contradict  all 
that  their  eyes  and  ears  reveal  to  them  in  the  world  of  firm, 
concrete,  positive,  indisputable  fact, 

George  Basil  Dixwell. 


TARIFF   COMMISSION. 


TARIFF    COMMISSION. 

PHILADELPHIA,   PA.,   OCT.   14,   1882. 


Prof.  "W.  G.  Sumner,  of  New  Haven,  Conn.,  addressed  the 
Commission  as  follows  :  — 

"  I  have  noticed  that  in  the  discussions  which  have  taken  place  before 
this  Commission  there  has  been  a  constant  reiteration  of  some  false  doc- 
trines of  theoretical  political  economy  about  wages.  If  there  is  to  be  any- 
theoretical  political  economy  admitted,  it  is  worth  while  to  have  it  correct. 
I  have  therefore  thought  that  it  might  be  proper  for  me,  as  a  professional  stu- 
dent of  political  economy,  to  appear  here  and  read  a  paper  setting  forth  the 
true  relations  between  protective  taxes  and  wages." 

Mr.  Sumner  assumes  that,  being  a  professor  of  political  econ- 
omy in  a  great  institution  of  learning,  he  is  competent  to  correct 
what  he  alleges  to  be  a  gross  error  in  the  public  mind  in  regard 
to  the  relation  between  protection  and  wages.  His  reasons  shall 
be  carefully  examined;  but  we  must  first  ascertain  how  much 
deference  we  ought  to  pay  to  his  opinions  on  the  ground  of  his 
being  a  professor.  What  guarantee  does  that  fact  give  of  the 
accuracy  of  his  doctrines  ?  Let  us  see  how  it  has  been  with  oth- 
ers over  whom  Mr.  Sumner  could  hardly  claim  superiority. 

First  let  us  take  Prof  Adam  Smith,  the  very  distinguished 
author  of  the  "  Enquiry  into  the  Nature  and  Causes  of  the  "Wealth 
of  Nations."  He  was  as  certain  as  Mr.  Sumner  of  the  correctness 
of  his  opinions ;  indeed,  he  was  not  the  least  bashful  about  inti- 
mating that  the  "  notions  "  of  all  statesmen  and  lawgiver  were 
childish  in  comparison  with  his. 

But  Prof  J.  Pi.  McCulloch  (equally  positive)  declared  that  Adam 
Smith  was  in  error  upon  more  than  eighty  points,  many  of  them 
of  great  importance. 


4  TARIFF   COMMISSION. 

Mr.  John  Stuart  Mill,  also,  who  was  so  distinguished  a  thinker 
and  reasoner  as  to  be  ranked  perhaps  almost  upon  an  equality 
with  the  professors  of  political  economy,  declared  that  the  work 
of  Adam  Smith  was  "  in  many  parts  obsolete  and  in  all  parts 
imperfect "  !  and  Mr.  Mill  could  not  agree  with  Malthus,  Chalmers, 
or  Carey. 

But  Professor  Cairnes  dissents  in  very  important  points  from 
Mr.  Mill,  although  declaring  himself  to  be  a  humble  follower; 
while  Professor  McLeod,  in  a  work  which  has  had  an  ftnmense 
success  upon  the  Continent  of  Europe,  maintains  that  Mr.  Mill 
and  all  his  school  are  in  error  as  to  the  very  method  of  studying 
political  economy,  —  they  declaring  that  it  should  only  be  studied 
by  the  deductive,  he  that  it  can  yield  correct  results  only  when 
investigated  by  the  inductive,  method. 

Professor  McLeod  also,  in  his  Dictionary,  falls  foul  of  other 
professors  upon  various  points,  especially  upon  their  doctrine  that 
absenteeism  is  no  injury  to  a  country ;  and  he  presses  his  own 
views  with  such  vigor  and  warmth  as  might  lead  a  hasty  reader  to 
infer  that  his  opponents  were  little  better  than  blockheads.  But 
it  would  be  a  very  precipitate  reader  who  would  draw  such  a  con- 
clusion. Each  of  these  great  thinkers  made  inestimable  contri- 
butions to  political  economy,  notwithstanding  that  each  contradicts 
others  and  himself  as  well.  To  examine  these  contradictions  and 
ascertain  wherein  and  to  what  degree  each  was  right,  is  a  work  to 
which  plodding  conscientious  mediocrity  is  quite  competent.  The 
critic  needs  not  the  genius  and  inspiration  of  the  author,  but  only 
the  dihgence  which  brings  the  author  to  the  bar  of  his  own 
methods  of  reasoning.  Mr.  Mill's  great  works  upon  Logic  and 
Political  Economy  will  furnish  the  tools  by  which  to  detect  the 
few  errors  into  which  even  Mr.  Mill  himself  may  have  fallen  ; 
but  they  wiU  never  be  discovered  by  one  who,  like  Professor 
Sumner,  draws  his  inspiration  from  Bastiat,  Mr.  D.  A.  Wells,  and 
the  Cobden  Club  Essays,  and  who  from  inability  to  understand 
Mr.  Mill's  methods  is  quite  incompetent  to  distinguish  between 
the  propositions  which  are  and  those  which  are  not  consistent 
with  those  methods.  Professor  McCuUoch's  paradox  regarding 
absenteeism  passed  for  science  for  thirty  years  without,  however, 
making  any  impression  upon  the  popular  mind  ;  but  at  last  the 


TARIFF   COMMISSION.  5 

error  in  his  reasoning  was  recognized,  and  his  position  abandoned 
by  several  even  of  the  free-trade  writers. 

We  see,  then,  that  we  cannot  safely  indulge  our  laziness  in  al- 
lowing a  professor  to  think  for  us.  He  has  no  sources  of  infor- 
mation which  are  not  equally  open  to  statesmen  and  educated 
business  men,  all  of  whom  have  been  pupils  of  the  professors  and 
afterwards  pupils  in  the  great  school  of  practical  life,  wliere  they 
often  learn  tirst  to  doubt  and  then  to  discard  much  which  had 
been  learned  at  college. 

The  professor,  in  fact,  stands  at  some  disadvantage.  He  is 
obliged  to  teach  the  same  old  propositions  year  after  year,  until 
they  root  themselves  in  his  mind  too  deeply  to  be  torn  up ;  in 
short,  he  is  very  liable  to  fall  into  that  condition  which  is 
described  by  Carlyle  as  being  "  possessed  by  Fixed  Idea." 
In  ordinary  life  he  has  nobody  to  challenge  his  opinions,  and 
he  must  tlierefore  be  more  likely  than  others  to  become  dog- 
matic, and  to  be  prone  to  wrath  whenever  he  does  encounter 
opposition. 

Like  Professor  McCulloch  in  the  matter  of  absenteeism,  Mr. 
Sumner  comes  forward  to  sustain  a  paradox,  and  to  prove  by 
dialectics  that  wages  are  not  higher  by  reason  of  protection ; 
that  is,  he  has  set  himself  the  task  of  proving  that  an  opinion 
generally  entertained  upon  both  sides  of  the  Atlantic  during  all 
past  time  is  entirely  erroneous.  It  was  necessary  in  the  interest 
of  the  free-trade  party  and  of  the  Cobden  Club  that  somebody 
should  make  the  attempt,  and  it  was  perhaps  judicious  that  he 
should  be  one  who  would  carry  before  him  the  shield  of  a  great 
institution  of  learning ;  but  we  have  said  enough  to  show  that 
this,  after  all,  amounts  to  very  little,  and  that  the  reasons  of  a 
professor  must  be  brought  to  the  test  as  rigidly  as  those  of  any 
other  individual.     Let  us  now  examine  them. 

"I  learn,  from  the  reports  of  tlie  proeeediiigs  Lefore  this  Commission,  that 
some  people  believe  that  protective  taxes  make  wages  higli,  and  at  the  same 
time  that  high  wages  make  protective  taxes  necessary.  If  the  Commission 
should  act  on  these  two  doctrines,  it  would  first  raise  taxes  in  order  to  raise 
wages  in  obedience  to  a  delegation  of  workmen,  and  then  raise  taxes  again 
in  order  to  offset  the  previous  increase,  in  the  interest  of  a  delegation  of 
employers,  and  so  on  forever.  These  two  notions,  therefore,  contradict  each 
other  and  produce  an  absurdity.      They  are  both  false.      Protective  taxes 


6  TAKIFF   COMMISSION. 

lower  wages,  and  high  wages  are  a  reason  for  free  trade,  not  for  protection. 
These  two  propositions  confirm  and  sustain  each  other,  and  so  ratify  the  truth 
of  each." 

The  logical  deception  in  this  paragraph  consists  in  the  substi- 
tution of  a  universal  for  a  limited  proposition.  Men  who  inves- 
tigate cases  in  political  economy,  whether  by  the  deductive  or 
inductive  methods,  embody  their  conclusions  in  a  set  of  words 
which,  taken  with  the  circumstances  of  the  case  known  to  all  the 
world,  are  limited  with  sufficient  exactness  to  prevent  anybody  of 
ordinary  caution  from  falling  into  error. 

Thus  Adam  Smith,  Fisher  Ames,  Mr.  John  Stuart  Mill,  and 
many  others  have  noticed  that  where  cheap  land  is  to  be  had  men 
will  flock  to  it,  unless  drawn  to  other  pursuits  by  wages  high 
enough  to  overcome  the  attraction  of  the  land.  Adam  Smith, 
speaking  of  the  Colonies,  says :  "  From  artificer  a  man  becomes  a 
planter,  and  neither  large  wages  nor  the  easy  subsistence  which 
that  country  affords  can  bribe  him  rather  to  work  for  other  people 
than  for  himself.  He  feels  that  an  artificer  is  the  servant  of  his 
customers,  from  whom  he  derives  his  subsistence;  but  that  a  planter, 
who  cultivates  his  own  land  and  derives  his  necessary  subsistence 
from  the  labor  of  his  own  family,  is  really  a  master,  and  inde- 
pendent of  all  the  world." 

Here  the  inclinations  of  the  individual  are  opposed  to  the  in- 
terests of  his  class  and  to  those  of  the  whole  community,  which 
tends  to  become  disproportionately  agricultural,  to  depend  more 
and  more  upon  distant  nations  for  everything  except  food,  and  to 
become  poorer  and  poorer  as  it  increases  in  numbers.  The  de- 
mand of  the  outer  world  for  the  food  and  raw  materials  of  the 
United  States  cannot  increase  as  fast  as  the  home  population  ; 
for  the  outer  world  can  take  payment  for  the  conversion  of  raw 
into  finished  products  only  in  a  few  articles  of  comparatively  easy 
transportation,  while  the  home  artificer  and  manufacturer  take 
payment  in  every  sort  of  product  and  every  sort  of  service.  Let 
the  producers  of  food  and  raw  materials  allow  to  the  other  classes 
such  emoluments  as  are  sufficient  to  induce  a  portion  of  the  com- 
munity to  abstain  from  becoming  farmers,  and  the  nation  will 
grow  symmetrically.  The  daily  increasing  numbers  and  skill  of 
the  other  classes  will  give  the  market  which  will  enable  agricul- 


TARIFF  COMMISSION.  7 

ture  to  avail  itself  of  better  tools,  machines,  draiuage,  and  other 
improvements.  The  emoluments  of  the  other  classes,  mean- 
while, can  never  exceed  the  limit  named,  —  to  wit,  that  which 
balances  the  disposition  of  an  individual  to  become  an  inde- 
jDendent  landowner.  If  it  goes  beyond  this  for  a  while,  more 
persons  will  abstain  from  farming,  and  the  balance  will  be  re- 
stored. But  before  the  introduction  of  manufactures  there  is 
not  only  the  difficulty  of  high  wages  but  also  that  of  want 
of  skill.  Without  a  protective  duty  adequate  to  shut  out  the 
foreign  article  nothing  can  be  done.  The  duty  being  laid  on 
raises  the  price,  but  not  to  the  extent  of  the  duty,  for  the  for- 
eign price  declines  under  the  reduced  demand.  If,  however,  the 
duty  be  sufficient,  the  manufacture  is  introduced  at  a  certain 
price  which  covers  the  higher  wages  and  also  the  want  of  skill. 
This  rise  in  price  is  for  the  moment  a  disadvantage  to  the  por- 
tion of  the  community  who  before  obtained  a  sufficiency  of  fin- 
ished products;  but  the  articles  come  at  once  within  the  reach  of 
a  wider  circle,  who  before  could  not  obtain  them  at  all,  or  not  in 
sufficient  quantity,  on  account  of  the  low  price  or  unsalableness  of 
their  crops.  The  duty  removes  those  who  were  causing  an  agri- 
cultural glut,  and  whose  labor  therefore  produced  less  than  nothing, 
and  puts  them  upon  the  construction  of  finished  products  which  are 
pure  gain  to  the  community.  The  gross  annual  product  is  increased 
by  their  whole  value.  There  is  more  to  divide,  and  demand  and 
supply  ultimately  distribute  the  increase  throughout  the  commu- 
nity. The  farmer  and  planter  are  the  first  to  feel  it.  Their  occu- 
pation becomes  more  remunerative ;  and  from  this  movement 
there  folloivs  Si  rise  of  wages  in  the  non-agricultural  portion  of  the 
community.  The  working  of  the  economic  forces  is  progressive, 
not  simultaneous  or  instantaneous.  The  protective  law  first  re- 
lieves the  agricultural  glut  and  apathy,  and  this  in  turn  causes 
an  increased  demand  for  finished  products.  Wages  in  all  de- 
partments will  gradually  advance,  out  they  can  augment  no  farther 
nor  faster  than  the  gross  annual  product.  The  protective  tax, 
as  Professor  Sumner  likes  to  call  it,  simply  removes  an  obsta- 
cle which  prevents  the  best  and  the  natural  distribution  of  the 
population.  As  skill  increases,  the  price  falls  under  home  com- 
petition until  it  covers  only  the  difference  in  the  cost  of  labor ; 


8  TiRIFP    COMMISSION. 

and  the  skill  may  increase  so  as  to  cover  this  also,  and  give  the 
community  the  article  as  cheaply  as  it  could  be  imported  with- 
out any  duty.  Such  is  the  case  with  regard  to  tools,  locomo- 
tives, agricultural  machinery,  and  many  other  goods,  including  the 
greater  part  of  the  cottons  consumed  in  the  country.  Such  ap- 
pears to  be  nearly  the  case  with  regard  to  the  woollens  used  by 
the  bulk  of  the  people.  The  fine  cottons  and  woollens  which  are 
objects  of  ostentation  are  still  mostly  imported.  The  duty  on 
them  gives  a  large  revenue  to  the  Government,  and  in  reality 
comes  out  of  nobody,  as  their  higher  price  only  fits  them  the  bet- 
ter to  enable  A  to  appear  as  rich  as  B.  It  is  these  duties,  however, 
—  the  duties  upon  objects  of  luxury  and  ostentation,  —  which 
irritate  some  of  the  salaried  classes  who  do  not  understand  po- 
litical economy,  and  even  some  professors  of  the  subject.  They 
think  themselves  oppressed,  they  hate  the  manufacturers  who 
live  more  showily  than  they  can,  and  they  make  every  effort  to 
persuade  the  bulk  of  the  people  that  they  also  are  the  victims  of 
oppression. 

If  they  understood  the  subject  they  profess,  they  would  know 
that  if  its  present  objects  were  cheapened  to  ostentation,  it  would 
reject  them  and  fly  to  others ;  and  they  would  also  know  that 
whatever  social  necessity  there  may  exist  for  such  indulgences 
must  surely  in  the  long  run  be  considered  in  the  salaries  paid 
them.  But  this  necessity  does  not  go  a  great  way.  The  high 
respect  which  they  and  their  families  command  on  account  of 
their  much  honored  office  relieves  them  from  such  necessity. 
The  wise,  temperate,  truthful,  benevolent,  right-hearted  professor 
is  as  welcome  in  homespun  as  is  Crcesus  in  broadcloth  ;  and  if  any 
individual  fail  to  command  respect,  it  can  only  be  because  he  is 
an  exception  to  the  rule,  and  wanting  in  the  high  intellectual 
and  moral  qualities  usually  exhibited  by  professors.  But  to  re- 
turn to  the  price  of  manufactured  goods.  It  must  be  sufiicient 
to  pay  the  wages  of  labor  and  the  profit  on  capital  usual  in  the 
community.  Higher  than  this  it  cannot  be  for  any  long  time, 
and  it  cannot  be  long  lower.  Monopoly  has  had  no  place  in 
political  economy  since  the  discussion  upon  that  point  between 
Say  and  Eicardo. 

It  will  be  seen,  then,  that  the  propositions  of  the  protection- 


TAEIFP   COMMISSION.  9 

ists, —  1.  That  a  duty  raises  wages  gradually  as  the  annual  prod- 
uct increases ;  2.  That  high  wages  (so  far  as  wages  affect  the 
cost,  and  are  not  overmastered  by  greater  efficiency)  make  pro- 
tection necessary,  —  are  limited.  Within  the  limits  naturally 
and  necessarily  attaching  to  them  they  are  not  contradictory,  and 
they  do  not  produce  an  absurdity. 

But  for  these  limited  propositions  Mr.  Sumner  substitutes  two 
universal  propositions,  — 

1.  That  a  duty  always  raises  wages,  and  raises  them  in  propor- 
tion to  its  magnitude. 

2.  That  high  wages  always  make  protection  necessary,  and 
necessary  in  proportion  to  their  height. 

These  universal  propositions  he  endeavors  to  impute  to  the 
protectionists,  depicting  the  Commission  first  raising  the  duty  in 
order  to  raise  wages,  and  then  raising  it  again  to  compensate  the 
manufacturer  for  the  higher  wages,  and  so  on.  It  is  an  ingenious 
sophism,  well  calculated  to  impose  upon  those  whom  a  technical 
education  has  deprived  of  their  natural  intuitive  judgment,  while 
only  half  teaching  them  how  to  reason  by  propositions ;  but  it 
would  never  impose  upon  any  thoroughly  educated  person  nor 
upon  any  practical  man.  The  latter  would  put  it  aside  at  once 
as  nonsense,  and  I  fear  would  even  think  me  a  fool  for  spending 
time  in  showing  it  to  be  so. 

What  would  the  Commission  have  answered  to  a  deputa- 
tion of  either  workmen  or  employers  asking  for  an  advance  of 
the  duty  for  such  purposes  ?  Why,  that  if  the  industry  already 
existed,  and  upon  an  average  of  years  was  paying  the  rate  of 
profit  usual  in  the  community,  then  the  duty  had  done  all  tliat 
it  could  do,  —  it  had  excluded  the  foreign  product,  and  left  the 
price  and  the  wages  to  be  arranged,  as  they  must  be,  by  tlie 
internal  demand  and  supply.  Higher  duties,  the  Commissioners 
would  have  said,  cannot  raise  your  w^ages  any  more,  nor  raise 
your  profits.  An  additional  amount  would  positively  have  no 
effect. 

To  this  the  committees  might  say.  Why  not,  then,  raise  the 
duties  ?  And  the  only  answer  that  could  be  given  them  would  be, 
Because,  if  we  raised  the  duties,  it  would  be  a  handle  for  dema- 
gogues to  use  with  those  uninformed  about  such  matters.     It 


10  TARIFF   COMMISSION. 

would  be  represented  that  the  additional  ten  or  twenty  per  cent 
was  added  to  the  price. 

The  "  Boston  Transcript,"  "  Globe,"  "  Herald,"  and  even  such 
high-toned  papers  as  the  "  Advertiser,"  and  the  "  New  York 
Times  "  admit  articles  based  upon  this  economic  absurdity.  The 
"  Herald "  even  published  an  article  which  declared  that  the 
manufacturers  of  woollens  could  make  the  common  goods  suitable 
for  the  general  consumption  as  cheaply  as  they  could  be  made 
abroad,  and  yet  took  one  hundred  and  thirty-five  per  cent  profit 
to  the  detriment  of  the  hod-carrier  and  poor  sewing-girl !  All 
business  men  who  were  in  vain  trying  to  find  investments  to  pay 
six  per  cent  were  amused,  but  uninformed  people  were  misled. 

The  next  two  paragraphs  read  as  follows  :  — 

"  The  interests  of  the  man  who  pays  wages  and  those  of  the  man  who  re- 
ceives wages  are  antagonistic.  The  one  wants  wages  low  and. the  other  wants 
wages  high.  The  protectionist  legislator  pretends  to  step  in  between  them 
and  satisfy  both  at  once.  He  pretends  to  make  both  parties  happy  at  once. 
'  I  am  going  to  make  your  wages  high,'  says  he  to  the  wage  receiver.  '  What, 
then,  will  become  of  me  ? '  says  the  wage  payer.  '  I  will  make  wages  low 
for  you,'  he  replies.  '  How  is  that  1 '  cry  the  laborers  and  all  their  friends  ; 
'you  are  going  to  make  wages  low  ?'  'No,'  replies  the  legislator,  'I  mean 
that  I  will  make  the  price  of  the  products  high,  which  will  have  the  same 
effect  for  the  employer.'  '  But  how  is  that  V  cry  the  consumers  ;  'you  mean 
to  make  prices  high  by  law  ? '  '  No,'  replies  the  legislator,  '  I  do  not  really 
make  prices  high  ;  it  only  looks  so.  My  measures  really  make  prices  low.' 
We  have  here,  then,  the  greatest  miracle  that  has  ever  been  accomplished. 
We  have  heard  of  making  something  out  of  nothing,  but  here  we  have  crea- 
tion and  destruction  in  one  and  the  same  act.  Certainly  the  problem  of  uni- 
versal happiness  is  solved  if  we  have  found  out  how  those  who  buy  need 
pay  little,  and  those  who  sell  may  at  the  same  time  receive  much  ;  how  prices 
may  be  raised  for  the  producer  and  lowered  for  the  consumer  both  at  the 
same  time.  As  we  are  all  producers  and  all  consumers,  we  may  all  sell  at 
the  high  prices  and'all  buy  at  the  low  ones,  and  all  get  rich  together.  This 
is  why  it  is  that  the  protected  manufacturers  are  found  bulling  what  they 
are  short  of  (that  is,  labor)  and  bearing  what  they  are  long  of  (that  is, 
products).  They  have  discovered  this  wonderful  system  by  which  all  are 
to  bull  everything  and  bear  everything  at  the  same  time,  and  win  a  big 
difference  out  of  nothing.  No  wonder  the  protectionists  are  enraged  at  the 
economists  who  are  still  stupidly  teaching  that  we  can  produce  nothing  ex- 
cept by  applying  labor  and  capital  to  land. 

"  Who  is  the  beneficent  genie,  now,  who  works  all  the  magic  of  the  protec- 
tionist system  1     It  is  tax.     If  taxes  are  only  rightly  adjusted,  says  the  pro- 


TARIFF    COMMISSION.  11 

tectionist,  they  make  wages  high  and  low  and  prices  high  and  low  both  at 
the  same  time.  When  one  hears  this  kind  of  nonsense,  one  is  forced  to  be- 
lieve that  the  sum  of  superstition  in  the  world  is  a  constant  quantity.  Su- 
perstition is  a  defective  sense  of  causation.  The  savage  who  wears  a  bone 
tied  to  his  arm  as  a  fetich  to  ward  off  misfortune  believes  that  there  is  a 
connection  of  cause  and  effect  where  there  is  none.  The  astrologer  thought 
that  the  relations  of  the  planets  to  each  other  affected  the  fate  of  persons 
born  at  a  certain  time.  He  saw  a  connection  of  cause  and  eflect  where  there 
is  none.  The  protectionist  legislator  lays  a  tax  and  goes  home  secure  in  the 
faith  that  wages  will  be  high,  prices 'low,  and  prosperity  stable,  as  if  there 
were  a  fixed,  direct,  and  inevitable  law  of  nature  connecting  taxes  with  social 
welfare  and  nothing  else.  This  superstition  is  more  wild  than  fetichism  or 
astrology." 

As  Mr.  Sumner  says,  "  When  one  hears  this  kind  of  nonsense,^ 
one  is  forced  to  believe  that  the  sum  of  superstition  in  the  world 
is  a  constant  quantity  ; "  hut  if  superstition  be  a  defective  sense  of 
causation,  then  Mr.  Sumner  certainly  is  the  most  superstitious 
man  on  earth,  for  he  shows  an  unparalleled  inability  to  appreciate 
the  action  and  reaction  of  economic  causes. 

General  Jackson,  writing  in  1824,  said  :  "  The  American  farmer 
has  neither  a  foreign  nor  a  home  market,  except  for  cotton.  Does 
not  this  clearly  prove  that  there  is  too  much  labor  employed  in 
agriculture,  and  that  the  channels  of  labor  should  be  multiplied  ? 
Common  sense  points  out  at  once  the  remedy.  Draw  from  agri- 
culture the  superabundant  labor,  and  employ  it  in  mechanism 
and  manufactures,  thereby  creating  a  home  market  for  your  bread- 
stuffs,  and  distributing  labor  to  a  most  profitable  account,  and 
benefits  to  the  country  will  result.  Take  from  agriculture  in  the 
United  States  six  hundred  thousand  men,  women,  and  children, 
and  you  at  once  give  a  home  market  for  more  breadsfeuffs  than  all 
England  now  furnishes." 

Benjamin  Franklin,  writing  in  1771,  said:  "  Every  manufac- 
turer encouraged  in  a  country  makes  a  part  of  a  market  for  pro- 
visions within  ourselves,  and  saves  so  much  money  to  tlie  country 
as  must  otherwise  be  exported  to  pay  for  the  manufactures  he 
supplies.  Here  in  England  it  is  well  known  and  understood 
that,  wherever  a  manufacture  is  established,  it  raises  the  value 

1  The,  nonsense  is  Sunuicrian  nonsense  exclusively,  and  is  founded  on  a  niis- 
stateinent.  No  protectionist  ever  pretended  to  "  make  wages  high  and  low  and 
prices  high  and  low  both  at  the  same  time," 


12  TARIFF  COMMISSION. 

■of  the  land  in  the  neighboring  country  all  around  it.  It  seems, 
therefore,  the  interest  of  our  farmers  and  owners  of  land  to  encour- 
age our  young  manufactures  rather  than  foreign  ones." 

The  condition  of  affairs  described  by  General  Jackson  was  a 
verification  of  the  deductions  made  from  Adam  Smith's  remarks 
about  the  attractiveness  of  plentiful  land.  Eeasouing  led  us  to 
the  conclusion  that  the  tendency  was  to  become  unduly  and  un- 
profitably  agricultural.  Our  country  tried  the  experiment,  and 
found  it  was  so.  Mr.  John  Stuart  Mill  also  recognized  this  ten- 
dency, and  he  recognized  it  as  a  difficulty  out  of  which  the  efforts 
of  individuals  to  benefit  themselves  cannot  extricate  a  commu- 
nity :  that  laissez  /aire  is  entirely  impotent,  and  government 
assistance  —  that  is  to  say,  the  combined  action  of  the  whole 
community  —  imperatively  necessary .^  Mr.  Sumner  lingers  be- 
hind Mr.  Mill  about  a  hundred  years,  and  knows,  or  appears  to 
know,  no  more  upon  the  subject  than  Adam  Smith  knew  in 
1755,  when  he  gave  his  lectures,  which  were  afterwards  pub- 
lished under  the  title  of  an  "  Enquiry  into  the  Nature  and  Causes 
of  the  Wealth  of  Nations."  How  long  will  Harvard  and  Yale 
insist  upon  being  the  Sleepy  Hollows  of  Political  Economy,  from 
which  pupils  emerge  with  ideas  that  have  been  obsolete  for  a 
century  ? 

What  Jackson  recommended  was  done  by  the  tariff  of  1824. 
The  people,  removed  or  retained  from  the  land  where  they  could 
only  add  to  a  surplus  already  unsalable,  produced  finished  pro- 
ducts, and  the  whole  value  of  their  labor  was  just  so  much 
added  to  the  gross  annual  product  of  the  country,  which,  being 
distributed  by  demand  and  supply,  could  produce  no  other  possi- 
ble effect  than  to  increase  all  incomes,  —  rent,  profits,  and  wages. 
The  price  at  which  the  new  products  sold  may  have  been  at  first 
thirty,  forty  —  if  you  please,  even  fifty  —  per  cent  higher  than 
they  could  be  imported  for;  but  we  got  the  commodities,  and 
did  not  have  to  export  money  or  commodities  to  pay  for  them. 
The  totality  of  consumers  may  have  had  to  pay  one  hundred  and 
fifty  millions  for  what  before  cost  one  hundred  millions,  and  so 
lost  fifty  millions ;  but  they  had  the  commodities,  and  in  their 
cajmcity  of  producers,  or  livers  upon  the  rent  or  profits  of  pro- 
1  See  Book  Y.  Chap.  XI.  §  12  of  his  "  Political  Economy." 


TAPvIFF   COMMISSION.  13 

ductive  instruments,  or  upon  salaries  drawn  from  the  general 
prosperity  of  the  country,  they  gained  the  one  hundred  millions 
which  would  otherwise  be  sent  abroad ;  and  as  increasing  skill 
produced  the  articles  with  less  and  less  labor,  the  legislator's 
"  little  tax "  became  less  and  less. 

Paragraphs  5  and  6  are  as  follows  :  — 

"  In  discussing  the  effects  of  taxation,  ambiguity  is  often  introduced  by  not 
distinguishing  carefully  the  alternatives  which  may  be  imagined.  If  we 
could  imagine  a  state  of  society  in  which  vice,  passion,  and  other  destructive 
forces  no  longer  existed,  government  could  be  dispensed  with,  or  it  would 
sink  into  some  low  form  of  co-operation  for  common  purposes.  Taxes  could 
then  be  dispensed  with.  If  we  compare  our  present  condition  with  any 
such  ideal  state  of  things,  all  taxes  are  minus  quantities,  reducing  by  so 
much  the  available  wealth  and  attainable  comfort  of  the  community.  But 
such  an  ideal  is  a  mere  poetic  dream.  If  we  had  no  government  we  should 
have  vice  and  passion  running  triumphantly  through  society,  wasting  and 
destroying  on  every  side.  Comparing  our  present  condition  with  that  state 
of  things,  the  taxes  which  we  pay  for  security,  peace,  and  order  as  products 
of  civil  government  are  a  small  loss  incurred  to  prevent  a  great  one.  Such 
is  the  only  sensible  and  correct  view  of  taxes.  They  are  never  anything  but 
loss  and  diminution  of  wealth,  and  it  is  as  impossible  to  convert  them  into 
productive  forces  as  it  would  be  to  make  destruction  create,  or  waste  save. 
Every  tax  is  on  the  defensive,  so  to  speak.  It  is  necessary  to  justify  every 
cent  which  is  drawn  from  the  community  by  taxes,  and  to  show  that  all  the 
capital  thus  consumed  is  necessary,  under  the  existing  order  of  things,  to  se- 
cure the  protection  of  society,  on  the  cheapest  terms,  against  the  forces  which 
would  disturb  security,  peace,  and  order.  If  the  taxes  were  large  enough, 
they  might,  as  in  Egypt  or  Turkey,  almost  take  the  place  of  the  evils  against 
which  governments  pretend  to  guard  society.  Every  unnecessary  cent  of 
taxation  is,  therefore,  a  pure  evil.  Government  in  Egypt  and  Turkey,  and 
in  much  of  Asia,  is  not  an  organization  to  defend  society  against  evils.  It  is 
only  an  organization  by  which  some  plunder  all  the  rest,  and  taxes  are  the 
means  by  which  they  do  it.  Wherever  any  taxes  are  laid  for  any  other  pur- 
pose than  to  provide  civil  order,  peace,  and  security,  government  approaches 
by  just  so  much  towards  the  Turkish  pattern.  Such  is  the  case  whenever 
protective  taxes  are  laid. 

"  Taxes  which  ward  off  greater  evils  at  the  lowest  practicaljle  cost  are  eco- 
nomical. They  do  not  lessen  the  average  comfort  of  the  people.  Taxes  which 
do  not  conform  to  this  description  do  lower  the  average  comfort  of  all  classes 
of  the  people.  The  wages  class  has  no  separate  interest  in  the  matter  which 
either  can  be  or  ought  to  be  considered  by  itself.  It  is  pure  demagogism  to 
say  that  it  is  the  business  of  the  government  to  make  wages  high.  If  I  dis- 
cuss the  effect  of  taxes  on  wages,  it  is  only  by  way  of  meeting  the  ([uestion 
in.  the  form  in  which  it  is  raised.      Protective  taxes  do  not  aim  to  produce 


14  TARIFF   COMMISSION. 

good  government,  or  to  accomplish  any  civil  purpose  at  all.  Their  aim  is 
industrial.  They  are  planned  to  help  some  people  to  get  a  living.  They 
interfere,  on  behalf  of  certain  persons,  with  the  conditions  of  production  and 
the  relations  of  competition.  A  man  who  engages  in  a  protected  industry  has 
some  other  reliance  in  his  business  than  his  own  capital,  energy,  enterprise, 
prudence,  &c.  The  man  who  is  in  an  unprotected  industry  has  somethmg 
more  to  guard  against  and  contend  with  than  the  problems  of  his  industiy 
and  the  ditficulties  of  the  market.  One  of  these  parties  has  a  special  advan- 
tage created  by  law  at  the  expense  of  the  other  party,  who  is  therefore  under 
a  special  disadvantage.  These  protective  taxes,  therefore,  cannot  be  defended 
or  justified  under  a  sound  view  of  the  function  and  justifiability  of  taxation. 
They  waste  labor  and  capital,  and  keep  the  wealth  of  the  country  less  than 
it  might  be  for  the  labor  and  capital  which  have  been  expended.  Let  us 
examine  in  particular  their  effect  on  wages." 

In  these  Mr.  Sumner  lays  down  several  propositions  which  are 
incorrect  in  fact,  and  several  which  have  been  repudiated  by  Mc- 
CuUoch,  Mr.  John  Stuart  ]\Iill,  and  the  other  great  authorities  in 
political  economy.  He  implies  that  the  only  permissible  functions 
of  government  are  the  providing  of  security,  peace,  and  order. 
This  contradicts  all  the  great  economists  who  affirm  that  govern- 
ment has  many  other  duties.  He  then  draws  attention  to  the 
fact  that  taxes  which  are  levied  in  Egypt,  Turkey,  and  Asia  are 
squandered  without  giving  the  security,  peace,  and  order  under 
pretence  of  giving  which  they  are  collected ;  that  they  are  an 
organization  bj  which  some  plunder  the  rest.  Then  he  says  that 
•wherever  there  are  protective  taxes  the  case  is  similar. 

PKOTECTIVE   TAXES. 

This  was  the  title  of  an  article,  by  Mr.  Sumner,  in  the  March 
number  of  the  "Princeton  Review"  of  1881.  As  it  was  calcu- 
lated to  mislead  the  public,  backed  as  it  was  by  the  weight  of  a 
great  institution  of  learning,  I  replied  to  it  in  those  terms  of  stud- 
ied respect  which  were  due  to  the  office  of  teacher.  In  my  reply 
I  said  :  "  A  protectionist  cannot  even  pass  by  the  title  without 
objection.  A  tax  is  not  necessarily  a  burden.  If  the  money  be 
well  and  economically  expended,  and  gives  us  good  roads,  good 
water-works,  good  police,  and  good  government  for  what  they 
ought  to  cost,  then  a  tax  is  a  great  blessing  and  saving ;  but,  un- 
fortunately, the  money  is  often  expended  recklessly  and  foolishly, 
and  so,  through  abuses,  the  very  name  of  tax  becomes  offensive. 


TARIFF   COMMISSION.  15 

The  free-trader,  who  writes  about  "  protective  taxes,"  avails  him- 
self of  this  existing  prejudice,  with  the  effect  of  disgusting  the 
reader  with  protection  in  advance  of  all  argument  in  respect  to 
it.  The  word  tax  also  gives  two  false  impressions :  first,  that 
all  protected  articles  cost  the  consumer  more  than  they  would 
if  not  protected ;  and  seeond,  that  when  they  cost  more,  the 
consumer  gets  no  counterbalancing  or  greater  overbalancing 
advantage." 

The  effect  of  the  taxes  which  are  paid  for  government  services 
press  with  double  weight  when  doubled,  with  treble  weight  when 
trebled.  A  duty  laid  on  for  protection  has,  and  can  have,  no 
such  effect.  If  thirty  per  cent  would  shut  out  the  foreign  article, 
all  is  done  which  can  be  done  by  the  tariff.  Forty  or  fifty  or 
sixty  per  cent  can  do  no  more.  I  also  pointed  out  that,  even  if 
our  cottons,  woollens,  and  iron  cost  the  consumers  one  thousand 
millions,  while  they  could  be  imported  for  seven  hundred  mil- 
lions, still  we  have  our  cottons,  woollens,  and  iron,  and  we  keep 
seven  hundred  millions  annually  at  home,  which  would  other- 
wise have  gone  abroad,  and  could  not  have  been  balanced  by  any 
alternative  occupation  upon  the  land,  since  the  land  even  now 
cannot  sell  to  advantage  all  that  it  can  produce. 

Mr.  Sumner,  however,  continues  to  avail  himself  of  the  catch- 
word of  "  protective  taxes ; "  and  the  whole  of  his  address  to  the 
Tariff  Commission  assumes  and  presupposes  that  the  pressure  of 
a  tariff  upon  the  consumer  is  in  proportion  and  equal  to  the  rate 
of  duties  imposed,  and  that  these  duties  inure  to  tlie  benefit  — 
in  fact,  go  into  the  pockets  —  of  the  protected  manufacturers  who, 
according  to  him,  hold  a  monopoly. 

In  pursuing  this  line  of  argument,  after  full  notice  of  its  inap- 
plicability, Mr.  Sumner  proves  one  of  two  things.  He  is  either 
ignorant  of  the  political  economy  of  the  latter  half  of  the  nine- 
teenth century,  and  incapable  of  comprehending  tlie  reasoning  of 
Say,  Iticardo,  ]\IcCulloch,  and  Mr.  John  Stuart  Mill,  or  else  he 
shuts  his  eyes  to  the  truth  under  the  influence  of  personal  or 
party  passion.  He  is  welcome  to  either  horn  of  the  dilemma. 
It  is  no  satisfaction  to  me,  or  to  any  fair-minded  American,  to 
see  him  in  such  a  position  ;  but,  on  the  contrary,  it.is  a  source 
of  mortification  and  humiliation.     To  us  professor  connotes  all 


16  TARIFF   COMMISSION. 

that  is  honorable,  dignified,  temperate,  benignant,  and  wise. 
When  he  condescends  to  enter  the  arena  of  politics,  the  passions 
of  the  crowd  stand  overawed  by  the  calm  and  majestic  presence. 
The  bandying  of  libellous  crimination  and  recrimination,  the 
unjust  imputation  of  base  motives,  the  giving  and  taking  of  the 
lie,  — all  are  hushed.  So  would  Harvard's  Kirkland,  or  Everett, 
or  Walker,  or  Sparks,  or  Peirce,  or  many  others  in  such  a  posi- 
tion, calm  and  sway  and  elevate  the  people.  We  have  come  to 
expect  this ;  and  the  opposite  action  of  Mr.  Sumner  affects  ns 
like  some  horrible  discord  in  music,  or  some  frightful  want  of 
harmony  in  colors. 

In  short,  there  are  proprieties  attaching  to  every  position  in 
life,  and  we  could  not  tolerate  an  actor  who,  in  the  garb  of  Soc- 
rates, should,  upon  the  appearance  of  a  fierce  mastiff,  descend 
Upon  all  fours  and  endeavor  to  outbark  and  outbite  the  ferocious 
animal. 

When  a  professor  appears  we  feel  that  he  should  be  able  to 
show  propositions  to  be  unsound,  if  they  really  be  so ;  and  when 
he  denounces  them  as  "  lies  "  we  can  only  distrust  his  ability  to 
make  good  his  assertions.     In  paragraph  7  he  says :  — 

"  Anything  whicli  lessens  the  number  of  persons  competing  for  wages,  or 
which  increases  the  amount  of  capital  which  may  be  divided  in  wages,  in- 
creases wages.  In  a  new  country  in  which  there  is  an  immense  amount  of 
unoccupied  land,  and  in  which  the  amount  of  capital  required  for  tilling  the 
soil  is  small,  any  man  who  has  a  pair  of  stout  hands,  although  he  has  no  skill 
and  very  little  capital,  may  become  a  landowner  and  agriculturist.  He  is  then, 
withdrawn  from  the  wages  class  ;  he  lessens  the  supjdy  of  labor  in  the  labor 
market ;  and,  as  an  independent  producer,  he  contributes  all  the  time  to  the 
capital  of  the  country.  Every  man  of  the  unskilled  labor  class,  therefore,  has 
an  alternative  offered  to  him.  He  is  never  driven  by  starvation  into  a  desper- 
ate competition  with  others  in  the  same  predicament  to  work  for  low  wages. 
He  is  on  the  right  side  of  the  market.  Supply  and  demand  are  in  his  favor. 
He  owns  a  thing  for  which  there  is  a  high  demand  in  the  market.  The  com- 
fort he  could  win  on  the  land  iixes  a  minimum  below  which  wages  cannot  fall. 
If  they  do  temporarily  fall  below  that  minimum,  the  laborers  take  to  the  land, 
as  they  did  in  the  hard  times  a  few  years  ago.  Since  the  comfort  obtainable 
from  an  abundance  of  cheap  and  fertile  land  is  high,  the  minimum  of  wages 
is  high.  This  makes  the  average  wages  of  the  country  high.  High  wages, 
therefore,  simply  mean  that  the  soil  of  this  continent  is  rich,  the  climate  is 
excellent  and  well  varied,  the  rivers  are  large  and  convenient,  the  mountains 
are  full  of  metal  and  coal,  the  people  are  industrious  and  energetic  and  are 


TARIFF   COMMISSION.  17 

eager  to  accumulate,  the  public  order  is  fairly  secure,  and  the  general  intel- 
ligence is  good.  The  conditions  of  production  are,  therefore,  good,  and  we 
produce  a  great  deal.  We  accumulate  capital  far  more  rapidly  than  any  other 
people  in  the  world." 

I  beg  the  reader  to  look  again  at  this  paragraph.  He  will  see 
that  Mr.  Sumner  admits  that  what  a  farmer  can  make  from  his 
land  is  equal  to  the  minimum  of  wages.  When  skilled  artisans 
and  manufacturers  from  any  cause  fail  for  a  length  of  time  to  ob- 
tain this  minimum,  they  take  to  the  land.  He  does  not  seem, 
however,  to  perceive  what  was  so  plain  to  Adam  Smith,  to  wit, 
that  the  normal  condition  of  agriculture,  where  there  was  plenty 
of  land,  was  less  profitable  than  the  non-agricultural  industries, 
Iccause  the  farmer's  position  is  more  independent,  and  one  in 
which  the  mere  possession  of  food  is  certain.  Those  greater  ad- 
vantages are  counterbalanced  by  a  smaller  profit,  just  as  the  high 
dignity  of  a  professor  causes  his  salary  to  be  less  than  that  of 
just  the  same  sort  of  man  employed  as  a  treasurer  to  a  mill. 
Adam  Smith  has  an  interesting  chapter  upon  this  point,  which 
has  been  accepted  by  all  subsequent  economists,  and  which  I  rec- 
ommend to  Mr.  Sumner's  attention. 

The  word  minimvAii  presupposes  and  admits  a  normal  some- 
thing greater  than  the  minimum.  It  concedes  the  point  that  in  a 
community  like  ours  the  non -agricultural  industries  are  more  pro- 
ductive than  the  agricultural ;  that  \inder  the  action  and  reaction 
of  demand  and  supply  among  ourselves,  the  man  who  works  at  a 
trade  or  carries  on  a  manufacture  adds  more  to  the  gross  annual 
product  than  the  farmer  does.  The  latter  takes  out  the  difference 
in  feelings  of  independence  and  perfect  security.  But  here  ]\Ir. 
Sumner  would  object  that  he  has  nothing  to  do  with  the  play  of 
industrial  forces  among  ourselves ;  that  he  refuses  to  consider 
them  ;  that  political  economy  regards  the  whole  world ;  that  there 
is  a  country  called  Great  Britain  which  will  take  our  agricultural 
products  and  give  us  in  exchange  finished  products  at  a  much 
better  bargain  than  our  artisans  or  manufacturers  can  or  will  give. 
And  this  position  he  immediately  demonstrates  in  the  following 
manner.  He  picks  out  some  article  such  as  iron  or  fine  woollens, 
and  shows  that  at  the  present  prices  for  cotton  or  for  wheat  here, 
and  the  present  prices  for  iron  and  woollens  there,  the  imported 


18  TARIFF   COMMISSION. 

article  without  duty  would  be  a  good  deal  cheaper  than  the  do- 
mestic product.  But  this  argument  assumes  that  if  we  had  occa- 
sion to  sell  more  largely  abroad  we  should  obtain  as  high  a  price 
as  now,  and  that  if  we  had  occasion  to  buy  more  largely  abroad 
we  should  buy  as  cheaply  as  now.  If  Mr.  Sumner  will  propound 
the  propositions  embodying  these  assumptions  to  any  merchant 
he  will  be  set  right,  or  he  can  be  set  right  without  going  out  of 
Yale,  by  turning  to  Mr.  John  Stuart  Mill's  chapters  upon  Inter- 
national Trade. 

Our  non-agricultural  industries  add  at  least  three  thousand 
millions  to  the  value  of  the  materials  they  deal  with.  We  now 
find  a  market  abroad  for  some  seven  hundred  millions  of  raw 
products ;  but  we  find  it  with  difficulty,  and  only  when  the  food 
crops  of  all  Europe  are  short. 

The  idea  of  selling  three  thousand  millions  more  at  any  price, 
or  one  thousand  millions  more  without  a  reduction  of  forty  to 
fifty  per  cent  in  our  prices,  is  an  idea  which  no  well-informed 
merchant  and  no  well-informed  economist  would  entertain  for  a 
moment. 

His  premises  do  not  lead  to  his  conclusion  that  "  high  wages 
simply  mean  that  the  soil  of  the  continent  is  rich,  the  climate  is 
excellent  and  varied,"  &c.  These  things  do  not,  by  his  own  show- 
ing, account  for  the  high  wages  that  exist,  but  only  for  a  high 
minimum  of  wages,  high  as  a  minimum,  but  a  good  deal  less 
than  what  we  enjoy.  His  observation  that  "  we  accumulate  capi- 
tal far  more  rapidly  than  any  other  people  in  the  world  "  is  prima 
facie  evidence  that  our  present  organization  of  industries,  as 
brought  about  by  a  protective  policy,  is  better  than  that  of  any 
other  nation  ;  but  it  is  totally  irrelevant  with  regard  to  an  entirely 
different  arrangement  such  as  Mr.  Sumner  would  prefer. 

It  is  tedious  to  be  obliged  to  refute  such  sophistries.  Para- 
graph 8  says : — 

"  It  is  one  of  the  humors  of  the  tariff  that  the  politician  appears  at  this  stage 
and  says,  '  Oh,  no  I  you  are  quite  wrong  in  attributing  the  prosperity  of  the 
country  to  those  causes.  It  was  I  who  did  it,  with  my  little  taxes.  The 
country  has  prospered  because  I  taxed  it  vigorously.  If  I  had  not  put  on  my 
taxes  the  country  would  have  been  ruined.'  He  argues  that  an  industrious 
people  on  a  fertile  soil  could  not  have  got  food  and  clothing  out  of  it  if  they 
had  not  had  the  right  taxes.     A  further  touch  of  the  ridiculous,  however,  is 


TARIFF   COMMISSION.  19 

added  by  those  politicians  who  declaim  about  the  dignity  of  the  American 
laljorer.  To  listen  to  the  speeches  and  read  the  editorials,  one  would  think 
politicians  formed  a  standard  of  comfort  which  they  thought  suitable  for  the 
American  laborer,  and  then  just  passed  the  right  laws  to  get  it  for  him.  It 
is  said  that  our  laborers  ought  not  to  be  on  the  standard  of  comfort  of  Euro- 
pean paupers.  It  must  be,  then,  that  the  American  sovereign  can  formulate 
his  demands  on  nature.  He  makes  up  his  mind  what  is  suitable  to  his  own 
majesty,  and  serves  notice  on  nature  to  provide  it.  His  attorney,  the  politi- 
cian, justly  indignant  that  nature  does  not  respond,  passes  a  law  to  secure  the 
becoming  thing  for  his  noble  client,  the  American  laborer.  In  this  view  of 
the  matter  certain  persons  are  '  nature's  noblemen '  in  a  sense  not  heretofore 
used.  A  little  examination  shows  us,  however,  that  we  are  only  dealing  with 
an  old  fraud  under  a  new  face.  The  old-fashioned  nobleman  drew  his  drafts, 
not  on  nature  but  on  his  fellow-citizens,  and,  as  his  friends  were  in  control  of 
the  government,  they  got  payment  for  him.  The  American  sovereign  can 
get  nothing  from  nature  which  he  does  not  earn.  If  the  politician  meddles 
in  the  matter,  he  can  only  rob  one  sovereign  to  favor  another.  That  is  all 
that  he  ever  has  done.  That  process  has  never  made  us  any  richer,  but  only 
poorer." 

The  protectionists  do  not  argue  that  an  industrious  people  on 
a  fertile  soil  could  not  get  food  and  some  clothing  out  of  it,  &c. 
They  argue  that  fifty  millions  of  people,  situated  like  those  of  the 
United  States,  could  not  have  got  food,  and  anything  like  their 
actual  present  quantity  of  clothing,  and  all  other  conveniences, 
had  the  foreign  products  been  left  free  to  come  in. 

Tlie  American  sovereign,  it  is  true,  can  get  nothing  from  nature 
which  he  does  not  earn ;  but  he  will  earn  twice  or  three  times  as 
much  under  a  rational  distribution  of  industries  as  he  can  if 
confined  to  the  production  of  raw  products,  for  which  there  is  no 
adequate  foreign  demand,  and  for  which  the  growth  of  a  domestic 
demand  is  prevented  by  the  constant  presence  of  foreign  products 
ready  to  be  sold  for  money.  Mr.  Sumner  is  in  error  in  alleging 
that  if  the  politician  —  say  rather  statesman  —  meddles  in  the 
matter  he  can  only  rob  one  sovereign  to  favor  another.  The 
statesman  who  promotes  measures  which  bring  about  a  suitable 
diversity  of  employments  can  cause,  and  in  the  United  States 
has  caused,  the  total  annual  product  per  head  to  be  doubled  and 
trebled,  thereby  doubling  and  trebling  the  aggregate  of  all  wages, 
all  profits,  and  all  rents.  He  can  cause  and  has  caused  a  pros- 
perity which  shall  endow  great  institutions  of  learning  and  fill 
them  with  instructors  whose  salaries  are  vastly  higher  than  they 


20  TARIFF   COMMISSION. 

could  have  been  under  a  free-trade  policy.  Mr.  Sumner's  argu- 
ment could  be  buried  out  of  sight  by  evidence  drawn  from  all 
recognized  authorities,  whether  those  on  the  protectionist  or  free- 
trade  side  of  the  question.  But  Mr.  John  Stuart  Mill  will  suffice. 
Although  breathing  every  day  an  atmosphere  surcharged  with  free 
trade  and  consequently  prejudiced  in  that  direction,  liis  "  Political 
Economy  "  is  full  of  passages  the  reasonings  of  which  followed 
out  to  their  full  consequences  prove  all  that  any  protectionist 
maintains.  As  to  Mr.  Sumner's  dogma  that  any  change  wrought 
in  society  by  the  united  action  of  the  whole  must  be  injuri- 
ous, let  the  reader  consult  Book  I.  Chap.  VIII.  §§  2,  3,  and  also 
Book  V.  Chap.  XI.  §  12,  of  Mr.  John  Stuart  Mill's  "  Political 
Economy."     Paragraph  9  says  :  — 

"Under  the  conditions  of  the  United  States,  a  tax  on  immigrants  would  prob- 
ably lower  wages,  not  raise  them.  The  country  is  underpopuhited.  So  long 
as  there  is  an  immense  amount  of  unoccupied  hind,  the  immigrants  do  not  go 
to  swell  the  wages  class  ;  they  go  upon  the  land  ;  they  open  it  up,  win  wealth 
from  it,  and  contribute  to  the  capital  of  the  country.  Each  new-comer  who 
is  industrious  counts  more  as  a  pair  of  new  hands  to  produce  than  as  another 
mouth  to  consume  ;  and  he  may  well  add  to  the  average  Avealth  per  head. 
Taxation  has  not  even,  therefore,  in  this  country  the  field  which  it  might 
have  in  some  countries,  if  it  were  used  to  keep  competitors  out  of  the  labor 
market." 

I  agree  that  under  the  present  condition  of  the  United  States 
a  tax  upon  immigrants  would  not  raise  wages,  but  not  for  the 
reason  given  by  Mr.  Sumner.  The  immigrants  from  European 
countries  quickly  assimilate  themselves  to  us.  They  distribute 
themselves  throughout  the  industries,  and  speedily  produce  and 
consume  as  much  as  others.  The  country  simply  grows  symmet- 
rically like  a  crystal  or  a  tree,  and  so  it  will  be  until  in  the  far 
distant  future  there  comes  to  be  a  scarcity  of  land,  mines,  &c.,  in 
comparison  with  the  population.     Paragraph  10  reads  :  — 

"  If  a  tax  on  laborers  could  not  raise  wages,  certainly  no  tax  on  commodities 
can  do  so.  Protective  taxes  aim  to  keep  certain  foreign  commodities  out  of 
the  country.  An  army  of  custom-house  officers  must  therefore  be  supported, 
not  to  collect  revenue,  but  to  prevent  revenue  from  being  collected.  This 
device  is  kept  up  in  order  to  secure  the  home  market  to  the  home  producer. 
The  home  producer  carries  on  his  business  at  a  loss.  He  says  that  he  would 
lose  capital  if  it  were  not  for  the  tariff.  His  industry,  he  says,  would  not  ex- 
ist if  it  were  not  for  the  tariff.    It  is  therefore  conducted  at  a  loss  all  the  time, 


TARIFF   COMMISSION.  21 

only  that  the  loss  is  not  borne  by  the  persons  carryiilg  on  the  business,  but  by 
the  consumers  of  the  goods.  The  protective  system,  therefore,  involves  tlie 
following  expenditiu-es  :  The  pay  of  all  the  custom-house  expenditures  to  keep 
up  the  system  ;  wages  and  profits  to  all  those  who  are  carrying  on  the  pro- 
ductive industries  ;  the  losses  incurred  by  the  protected  industries.  All  these 
outgoes  must  be  borne  by  the  non-protected  in  order  that  there  may  be  less 
goods  of  all  kinds  in  the  country  than  there  might  be  imder  free  trade.  How 
then  can  protection  increase  wages,  or  the  average  amount  of  these  goods 
which  can  be  obtained  by  each  laborer  in  the  country  ?  There  could  not  be 
a  more  flagrant  error.  If  there  is  anything  cheap  anywhere,  the  protectionists 
spring  into  activity  to  keep  the  American  people  from  getting  it.  If  there  is 
an  abundance  of  food,  clothing,  furniture,  and  other  supplies  Avhich  is  offered 
to  the  American  people  on  easy  terms,  the  protectionists  call  it  an  '  inunda- 
tion,' and  run  to  set  a  barrier  against  it.  A  few  weeks  ago  I  saw  a  hundred 
women  waiting  for  hours  on  the  sidewalk  for  the  opening  of  a  store  at  which 
some  fire-damaged  goods  were  to  be  sold  cheap.  A  protectionist  must  hold 
that  those  women  were  insane,  or  that  they  were  selfishly  ruining  the  country. 
It  is  impossible  to  raise  wages  by  opposing  cheapness  and  abundance.  The 
protective  system  lessens  wealth  ;  and  until  somebodj'  invents  an  arithmetic 
according  to  which  10  will  go  in  70  more  times  than  it  will  in  100,  it  is  cer- 
tain that  a  smaller  dividend  will  give  a  smaller  share  to  each  person.  The 
protective  system,  therefofe,  lowers  wages." 

This  whole  paragraph  is  based,  as  already  pointed  out  in  my 
former  reply  to  Mr.  Sumner,  upon  the  fallacy  of  division.  Under 
our  present  industrial  organization  we  have  our  own  food  and 
raw  materials,  and  export,  at  present  prices,  say  seven  hundred 
millions  of  raw  products.  Our  farmers  sell  these  seven  hundred 
millions  abroad,  and  they  sell  twelve  hundred  millions  at  home. 
Mr.  Sumner's  microscopic  vision  sees  only  the  present.  He  as- 
sumes that  if  our  farmers  had  to  sell  nineteen  hundred  millions 
abroad  instead  of  seven  hundred,  they  would  get  the  same  price. 
With  the  seven  hundred  millions  of  raw  products,  we  now  buy 
abroad  say  three  hundred  and  fifty  millions,  M'hich  we  could  not 
produce,  of  tropical  products,  and  a  like  quantity  of  the  finer 
manufactures  which  we  cannot  yet  produce  under  existing  duties. 
If  we  did  not  produce  finished  products  for  ourselves,  we  should 
have  to  buy  not  only  what  ^ve  now  buy,  but  many  times  that 
quantity.  Mr.  Sunnier  assumes  that  under  such  circumstances 
the  price  of  imports  would  be  the  same  as  now!  Or,  leaving  out 
the  reference  to  price,  he  assumes  that  whereas  now  we  exchange 
three  hundred  and  fifty  million   dollars  worth  of  raw  products 


22  TARIFF   COMMISSION. 

for  the  like  amount  of  finished  commodities,  we  could  exchange  at 
the  same  advantage,  if  we  were  under  the  necessity  of  selling 
and  buying  abroad,  four  times  as  much !  Neither  Mr.  John 
Stuart  Mill,  nor  any  other  economist  of  capacity  to  take  in  the 
whole  problem,  would  maintain  such  a  proposition.  Under  the 
supposed  change  we  not  only  should  obtain  our  finished  products 
at  a  much  less  advantageous  exchange  for  raw  products  than  we  do 
now,  but,  over  and  beyond  this,  we  should  not  be  able  to  obtain 
more  than  probably  a  third  part  as  many.  Oar  total  gross  annual 
product  would  not  be  100  to  70,  as  Mr.  Sumner  deduces,  but  as 
70  to  100  rather;  and  until  somebody  invents  an  arithmetic  by 
which  10  will  go  into  70  more  times  than  into  100  it  is  certain 
that  a  smaller  dividend  under  free  trade  will  give  a  smaller 
share  to  each  person.  Free  trade,  therefore,  would  lower  wages. 
Paragraph  11  says  :  — 

"Let  us  next  look  at  the  effect  of  protective  taxes  on  the  alternative  which  is 
open  to  the  American  laborer  to  go  upon  the  land.  The  protective  taxes  en- 
hance the  cost  of  all  articles  of  clothing,  furniture,  crockery,  utensils,  tools, 
and  machinery.  They  also  increase  the  cost  of  fuel  and  transportation. 
They  therefore  reduce  the  amount  of  all  the  commodities  mentioned  which  a 
farmer  can  get  for  a  certain  amount  of  farm  products.  They  therefore  lessen 
the  profits  of  agriculture  in  all  its  forms,  and  lessen  the  attractiveness  of  the 
land.  Whatever  lessens  the  attractiveness  of  the  land  lowers  the  niinimuni 
gain  of  all  manual  laborers,  increases  the  number  of  competitors  in  the  labor 
market,  and  reduces  the  amount  which  the  employer  needs  to  bid  in  order  to 
counteract  the  advantages  of  the  land.  Protective  taxes,  therefore,  take 
away  from  the  laborer  the  advantage  which  he  has  by  nature  in  this  country  ; 
that  is  to  say,  they  take  away  from  him  part  of  his  advantage  in  the  labor 
market.     Consequently  they  lower  wages." 

Underneath  the  whole  of  this  paragraph  lies  the  above  fallacy, 
which  assumes  that  present  prices  of  exports  could  be  obtained 
if  we  had  need  to  sell  four  times  as  much,  and  that  imports  could 
be  obtained  as  cheaply  if  we  had  occasion  to  buy  four  times  as 
much.  Theory,  as  laid  down  by  the  greatest  economists,  nega- 
tives this  assumption,  as  can  be  seen  by  reference  to  the  passages 
in  Mr.  Mill's  work  already  indicated.  Experience  contradicts  this, 
as  shown  by  the  quotation  already  made  from  Andrew  Jackson. 
The  truth  is  as  follows :  Protection  prevents  a  vast  number  of 
people  from  flying  to  the  land,  and  makes  them  consumers  in- 


TARIFF   COMMISSION.  23 

stead  of  producers  of  raw  products.  It  diininislies  the  aggregate 
of  the  farmer's  products,  and  increases  the  demand.  They  there- 
fore increase  the  profits  of  agriculture  in  all  its  forms,  and  in- 
crease the  attractiveness  of  the  land.  Whatever  increases  this 
increases  the  minimum  gain  of  all  manual  laborers,  and  increases 
the  number  of  competitors  for  labor,  and  increases  the  amount 
which  the  employer  needs  to  bid  in  order  to  counteract  the 
advantages  of  the  land.  Protection  therefore  secures  to  the 
laborer  the  advantage  which  he  has  by  nature  in  this  country, 
and  increases  it  by  diversifying  employments.  Consequently  it 
raises  wages  above  what  they  could  be  under  foreign  competition. 
At  the  same  time  it  hastens  the  moment  when  increasing  skill 
may  compensate  for  the  higher  moneyed  cost  of  labor ;  for  high 
wages  lead  to  greater  efforts  and  intelligence  on  the  part  of  oper- 
atives, and  to  greater  care  in  selecting  the  most  skilful  on  the 
part  of  employers,  and  to  a  more  extensive  use  of  the  very  best 
machinery. 

For  the  theory  of  this  I  appeal  to  Mr.  Mill.  For  the  verification 
of  the  theory  I  appeal  to  the  experience  of  the  United  States,  where 
the  growing  efficiency  of  labor  has  already  in  some  cases  overcome 
the  effect  of  its  greater  cost  per  man,  as  is  shown  by  the  very  many 
manufactured  goods  which  we  export,  and  by  the  approximation  to 
a  similar  cheapness  in  nearly  all  which  are  used  by  the  great  bulk 
of  the  people.  Champagne,  fine  broadcloth,  silks,  satins,  gloves, 
feathers,  &c.,  the  objects  of  ostentation  and  luxury,  are  much 
dearer.  Is  it  desirable  to  change  our  legislation  in  order  to 
cheapen  these  ?  I  beg  the  reader  to  carefully  compare  this  reply 
with  the  paragraph  to  which  it  is  an  answer.  Paragraphs  12 
and  13  read  :  — 

"  It  has  been  affirmed  by  protectionists  that  their  system  increases  capital. 
Two  ways  have  been  alleged  in  which  it  does  this,  —  (1)  by  improving  the 
organization  of  labor,  (2)  by  bringing  capital  into  nse  which  would  otherwise 
be  idle. 

"  1.  The  people  of  this  country  are  all  the  time  exercising  their  utmost  in- 
genuity to  organize  their  industry  to  the  highest  advantage.  Partly  they  do 
this  by  instinct.  Plenty  of  people  never  heard  of  the  '  organization  of  indus- 
try,' but  tliey  are  ctmstantly  arranging  their  busiiiess  to  save  lalior,  and  so 
gain  tinwj  and  prevent  waste.  They  are  also  constantly  laboring  intelligently 
to  secure  a  better  organization  of  industry.     But,  after  they  have  exhausted 


24  TARIFF   COMMISSION. 

their  ingenuity,  the  protective  system  assumes  that  some  other  persons,  viz. 
politicians  and  legislators,  can  see  some  better  organization  than  the  persons 
engaged  in  industry  have  themselves  been  able  to  devise.  If  one  part  of 
the  American  people  have  not  invented  the  best  organization  of  labor,  we 
have  no  one  else  to  call  upon  than  some  other  portion  of  the  American  peo- 
ple, and  we  must  appeal  from  the  men  of  business  to  the  politicians.  The 
politicians,  then,  as  an  incident  to  their  own  occupations,  rectify  the  errors 
and  shortcomings  of  the  business  men.  The  mode  they  employ  is  taxes. 
It  is  the  same  old  magic.  But  the  business  men  have  to  bring  intelligence 
to  bear  on  the  organization  of  labor,  while  the  protectionist  legislator  never 
has  brought  any  intelligence  at  all  to  bear  on  the  problem,  and  he  never 
can.  Protective  taxes  have  never  been  laid  in  view  of  any  true  knowledge 
of  the  industrial  circumstances,  and  they  never  can  be.  A  thousand  com- 
missions, sitting  for  ten  years,  and  actually  engaging  in  a  real  study  of  the  in- 
dustries of  this  country,  could  not  win  a  knowledge  of  our  industrial  system  ; 
and  if  they  could  acquire  such  knowledge  of  the  industrial  system  as  it 
exists  on  a  given  day,  their  knowledge  would  not  be  good  for  anything  the 
day  after,  on  account  of  the  new  inventions,  discoveries,  processes,  lines  of 
transportation,  financial  arrangements,  and  so  on." 

Here  we  have  the  antique  doctrine  that  a  man  must  know  his 
own  business  better  than  any  statesman  can  know  it,  and  that 
the  interests  of  the  man  are  identical  with  the  interests  of  the 
state.  This  was  entirely  refuted  by  John  Eae  (see  pp.  1-32)  some 
fifty  years  ago ;  moreover,  as  pointed  out  by  Mr.  Mill,  there  are 
cases  in  which  the  interests  of  the  whole  nation  and  that  of  the 
individual  coincide  only  when  all  can  be  made  to  act  in  a  certain 
way. 

The  case  of  bankers  is  in  point.  Every  intelligent  banker  sees 
that  it  is  for  the  public  interest  and  for  his  own  that  all  bankers 
should  keep  a  sufficient  reserve ;  but  if  some  do  and  some  do  not, 
the  reckless  in  fair  weather  take  away  the  business  of  the  others, 
and  when  a  storm  comes  their  failure  throws  a  portion  of  the 
consequent  loss  upon  those  who  have  been  prudent. 

Protection  is  still  more  in  point.  Fifty  millions  of  people 
may  believe,  and  believe  truly,  that  it  is  better  for  them  to  buy  of 
one  another,  —  that  by  such  means  a  greater  annual  product  can 
be  reached,  and  hence  a  great  benefit  to  all  classes  ;  that  there  will 
be  more  produced,  and  hence  more  to  divide.  But  the  recipients 
of  rents,  profits,  and  fixed  salaries  see  that  after  they  have  got 
their  incomes,  —  after,  in  short,  they  have  got  the  profit  arising  out 
of  protection,  —  it  would  be  an  excellent  thing  if  they  could  get 


TARIFF   COMMISSION.  25 

their  commodities  abroad.  A  and  B  and  C  wish  to  he  paid  very- 
high  profits  or  salaries  by  the  rest  of  the  alphabet,  but  not  to  give 
any  employment  in  return.  They  do  not  see  that  under  such  an 
arrangement  the  rest  of  the  alphabet  would  be  quite  unable  to 
pay  their  profits  and  salaries.  If  a  protective  law  binds  the 
whole  to  the  profitable  course,  it  will  be  followed ;  otherwise,  not. 
Each  will  say  to  himself,  "  The  action  of  one  individual  can  have 
no  appreciable  effect  upon  fifty  millions ;  and  whether  it  has  or 
not,  I  want  my  fine  broadcloth  to  be  cheap :  those  bloated  manu- 
facturers are  robbing,  cheating,  swindling,  pillaging  me,"  &c. 

There  are  cases  in  which  the  intelligence  of  the  statesman  can 
promote  the  public  good  in  a  way  that  is  unattainable  in  any 
other  manner.  This  is  admitted  by  Adam  Smith  in  passages 
where  he  is  not  arguing  for  free  trade,  and  is  distinctly  laid  down 
by  Mr.  Mill.  The  argument,  then,  of  Mr.  Sumner  is  too  obsolete 
to  be  repeated  in  the  year  1882.     Paragraphs  14  and  15  say :  — 

"  We  have  here  now  fifty  milUons  of  people  spread  over  a  continent  with 
great  varieties  of  climate  and  soil,  and  we  constitute  the  most  energetic,  rest- 
less, and  indefatigable  nation  which  has  ever  existed.  To  try  to  plan  a  sys- 
tem of  artificial  relations  of  industry  for  such  a  nation  is  the  most  ridiculous 
undertaking  that  could  be  proposed.  Any  one  who  talks  of  reaching  a  per- 
manent adjustment  of  the  tariff  to  fit  the  needs  of  all  interests  and  do  injus- 
tice to  none  is  talking  the  wildest  nonsense.  Nothing  less  than  the  impei'sonal 
forces  of  nature  can  adjust  interests  under  such  conditions,  and  there  is  oidy 
one  thing  which  can  be  predicated  of  any  steps  taken  by  the  statesman,  that 
is,  that  he  will  make  mischief.  A  man  who  is  running  a  railroad  easily  sees 
what  crude  nonsense  people  talk  about  railroading  when  they  know  nothing 
of  the  business.  A  banker  makes  the  same  observation.  So  does  every 
other  man  in  his  own  line.  What  chance  is  there,  then,  that  politicians  can 
deal  wisely  with  the  thousands  of  industries  and  interests  in  this  country  in 
all  their  manifold  and  complex  relations  to  each  other  1  We  might  as  well 
try  to  establish,  by  legislation,  a  system  of  health  which  would  prevent  the 
people  of  the  United  States  from  ever  being  .sick  any  more. 

"  Furthermore,  the  politicians  never  try  to  deal  with  the  whole  combina- 
tion of  industrial  interests.  They  listen  only  to  the  most  clamorous.  They 
heed  only  those  who  win  influence  and  so  secure  the  position  of  favorites. 
They  never  bring  any  intelligence  to  bear  on  the  question.  How  much  as- 
sistance is  needed  ?  There  never  is  any  adjustment  of  means  to  ends.  No 
tests  are  ever  applied  ;  no  guarantees  are  ever  given  ;  no  subsecpient  reports 
are  ever  made  by  the  recipients  of  favor  to  show  results  for  the  expentliture. 
Each  interest  comes  forward  and  asks  for  favor,  and  gets  it  for  n(j  reason  save 
because  it  asked  for  it.     The  x^etitioner  thinks  that  about  so  nuich  per  cent 


26  TARIFF   COMMISSION. 

will  do,  and  does  not  himself  know  or  ever  try  to  calculate  wbat  will  be  the 
effect  of  that  much  protection  to  him  when  offset  by  all  the  taxes  to  which  he 
must  submit  in  behalf  of  others  in  order  that  the  system  may  be  completed. 
Mr.  Peter  Cooper  says  that  the  tariif  ought  to  just  about  offset  the  difference 
between  American  and  European  wages.  If  that  could  be  done  and  were 
done,  it  would  just  take  away  from  the  American  laborer  those  superior  ad- 
vantages which  made  him  or  his  ancestors  come  across  the  ocean.  Now,  from 
this  tangle  of  absurdities  and  contradictions  and  ignorances  and  guesses,  it 
is  expected  that  guidance  will  come  which  shall  lead  the  American  pro- 
ducer to  a  better  organization  of  industry  than  he  could  arrive  at  if  left  alone, 
«o  that  greater  accommodation  of  capital  and  larger  wages  would  follow. 
From  such  causes  no  result,  save  waste  and  loss,  can  ensue  with  reduction  of 
capital  and  lowering  of  wages." 

According  to  Mr.  Sumner,  the  politician  —  say  rather  statesman 
—  has  never  brought  any  intelligence  to  bear  upon  the  question  of 
how  to  deal  with  the  whole  combination  of  industrial  interests ! 
"Well,  now,  let  us  order  out  an  immense  pair  of  scales.  Into 
one  we  will  put  Franklin,  Washington,  Jefferson,  Madison, 
Monroe,  Jackson,  Webster,  after  he  had  studied  the  subject,  — 
in  short,  we  will  put  a  large  majority  of  the  statesmen  of  the 
United  States  for  a  hundred  years  ;  and  into  the  other  we  will 
put  Mr.  Sumner,  backed  by  theories  which  all  the  great  econo- 
mists repudiate.  Is  it  easier  to  believe  that  all  these  great  in- 
telligences were  ignorant  and  corrupt,  or  to  believe  that  Mr. 
Sumner's  dialectics  have  led  him,  and  tend  to  lead  others,  into 
fatal  error?  Let  any  one  who  desires  the  truth  peruse  their 
speeches,  messages,  and  letters ;  or  let  him  read  Mr.  Hamilton's 
report  on  manufactures,  and  compare  its  prophetic  wisdom  with 
Mr.  Sumner's  production  now  under  review.  Let  him  note  the 
objects  for  which  Hamilton  recommended  the  protection,  and 
then  let  him  look  at  the  United  States  and  see  whether  those 
objects  have  or  have  not  been  attained ;  let  him  compare  Massa- 
chusetts with  the  more  fertile  Canada,  —  Canada,  too,  which  has 
been  aided  by  our  protective  policy,  which  has  prevented  the 
foreign  markets  from  being  overwhelmed  by  the  immense  mass 
of  our  raw  products  which  are  similar  to  hers.  Paragraphs  16 
and  17  read  :  — 

"  2.  It  is  alleged,  in  the  second  place,  that  protection  brings  capital  into 
use  which  would  otherwise  be  idle.  Every  one  of  us  who  has  any  capital  is 
anxious  to  put  it  to  productive  use  without  delay.     It  is  impossible,  in  the 


TARIFF   COMMISSION.  27 

nature  of  things,  to  keep  all  capital  all  the  time  employed.  Improvements 
(such  as  a  better  credit  system)  which  make  this  more  fully  realizable  are 
eagerly  adopted.  The  argument  I  have  cpioted  means  that  in  spite  of  this 
eagerness,  and  in  spite  of  the  chances  for  employing  capital  on  a  new  con- 
tinent, some  portion  of  the  capital  now  in  protected  industries  would  not  be 
in  use  if  it  were  not  for  protection.     Such  a  notion  is  beneath  discussion. 

"  There  is,  then,  no  way  in  which  protective  taxes  can  prodiice  capital. 
Every  analysis  shows  that  they  waste  it.  Not  a  cent  can  come  to  A  by  the 
action  of  the  tariff  which  does  not  come  from  B.  The  consequence  of  uni- 
versal borro^ving,  or  stealing,  or  gift-making,  however,  is  not  to  increase  capi- 
tal but  to  waste  it.  Hence  protective  taxes  lower  wages.  The  laborers  have 
been  exhorted  to  vote  for  protection,  lest  their  wages  should  be  reduced  to 
European  rates.  I  have  shown  that  the  rate  of  wages  obtained  here  is  due 
to  the  economic  forces  at  work  in  this  country.  There  is  only  one  thing 
which  could  reduce  American  wages  to  European  standards,  and  that  is  pro- 
tective taxes  applied  long  enough  and  with  sufficient  weight." 

In  Mr.  Sumner's  article  in  the  "  Princeton  Eeview,"  already  al- 
luded to,  he  said :  "  The  rest  is  all  phrases  intended  to  oceupy  atten- 
tion while  the  thimhlcrig  is  going  on.  If  this  is  not  so,  let  some 
protectionist  analyze  the  operation  of  his  system,  and  show  by 
reference  to  undisputed  economical  principles  where  and  how  it 
exerts  any  effect  upon  production  to  increase  it." 

He  himself  threw  down  the  glove ;  I  picked  it  up,  and,  shut- 
ting my  eyes  to  the  imputation  of  dishonesty,  I  replied  in  an 
article  which  was,  at  all  events,  courteous.  Mr.  Sumner  says 
that  it  is  beneath  discussion.  I  am  content  to  reaffirm  my  ar- 
guments, and  to  leave  it  to  competent  judges  to  decide  whether 
or  not  they  are  beneath  discussion.  Possibly  they  are  not  so 
much  beneath  discussion  as  above  refutation.  In  the  article  in 
question,  which  can  be  found  in  all  the  great  libraries  of  the 
United  States  in  a  volume  entitled  "  Free  Trade  and  Protection," 
I  pointed  out  the  precise  manner  in  whicli,  in  a  country  already 
possessed  of  a  great  variety  of  industries,  the  floating  capital, 
converted  to  a  fixed  form,  was  almost  instantaneously  repro- 
duced, so  that  the  nation  became  owners  of  the  fi.xed  capital, 
either  merely  by  calling  out  more  labor  or  by  turning  to  tlie 
production  of  capital  what  otherwise  would  have  gone  into  new 
carriages,  furniture,  houses  of  luxury,  &c.,  and  that  the  result 
came  about  generally  by  the  former  rather  tlian  by  the  latter 
means  ;    the  fixed  capital  resulting  from   a   fuller  employment 


28  TARIFF   COMMISSION. 

of  the  people,  and  not  by  a  mere  diversion  from  one  work  to 
another, 

Mr.  Sumner  thought  he  had  me  alone  to  deal  with,  but  he 
has  another  infinitely  more  formidable  antagonist  in  Mr.  John 
Stuart  Mill.  Let  any  one  turn  to  Book  IV.  Chap.  V.  of  Mr. 
Mill's  "  Political  Economy."  Mr.  Mill  had  in  mind,  to  be  sure, 
the  effect  of  an  abstraction  of  capital  by  government  for  purely 
unproductive  purposes ;  but  the  reader  will  see  at  once  that  the 
argument  is  much  stronger  with  regard  to  measures  leading  to 
the  construction  of  fixed  capital,  which  would  forever  after  be 
productive  of  commodities.  A  does  not  get  his  capital  from  B, 
for  A  can,  upon  the  average  of  years,  obtain  only  the  profits 
current  in  the  community.  A  gets  his  capital  out* of  his  own 
abstinence.  If  the  manufactured  article  at  first  costs  more,  it 
must,  with  increasing  skill,  cost  less  and  less,  and  by  necessity, 
enforced  by  competition,  be  sold  for  less  and  less.  If  B,  whose 
wages  or  salary  is  in  money,  pays  more,  C,  D,  and  the  rest  of 
the  alphabet,  practically  pay  less,  for  tliey  can  pay  with  commod- 
ities they  produce,  and  for  which  the  new  industry  occasions  an 
additional  demand  and  a  better  price.  Even  B  is  compensated, 
and  more  than  compensated,  by  an  augmentation  in  his  salary 
or  his  profits,  growing  out  of  the  general  increased  prosperity  of 
the  country. 

It  is  easy  to  call  this  "  thimblerigging,"  or  a  "  bungle  of  absurd- 
ities, contradictions,  ignorances,  or  guesses ; "  but  calling  names 
is  not  economical  reasoning.  If  there  be  anything  wrong  in  the 
deductions,  some  one  can  show  with  precision  and  courtesy  the 
exact  point  in  which  they  are  wrong.  It  is  not  the  protectionists 
who  shrink  from  bringing  doctrines  to  the  test  of  the  methods 
of  economic  reasoning  laid  down  by  the  greatest  recognized 
authorities. 

Mr.  Sumner  says  he  has  shown  that  the  rate  of  wages  now  ob- 
tained here  is  due  solely  to  economic  forces  at  work  in  this  coun- 
try. In  this  he  is  in  error.  He  has  only  shown  that  the  mininmm 
of  wages  cannot  be  less  than  food  and  such  small  modicum  of 
6lothing  and  other  conveniences  as  a  nation  producing  raw  pro- 
ducts could  obtain  from  foreign  markets  eternally  glutted  with 
such  products.    He  has  not  shown,  nor  can  he  (without  admitting 


TARIFF   COMMISSION.  29 

the  effects  of  protection)  show,  how  the  mucli  higher  existing  rate 
of  wages  has  come  about.  The  intimation  that  higher  or  long- 
continued  protection  could  reduce  wages  involves  tlie  economic 
absurdity  which  supposes  that,  in  a  population  of  fifty  millions, 
under  free  competition,  the  profits  upon  protected  industries  can, 
upon  an  average  of  years,  be  higher  than  upon  others.  Upon  this 
point  I  appeal  from  Mr.  Sumner  to  Adam  Smith,  Eicardo,  Mr. 
John  Stuart  Mill,  to  tlie  universally  accepted  conclusions  of 
economic  reasoning,  and  to  common  sense.  They  are  all  upon 
one  side,  and  all  against  Mr.  Sumner.  Paragraphs  18,  19,  and  20 
read  thus :  — 

"  There  is,  however,  another  argument  which  must  be  considered  in  this  con- 
nection. It  is  said  that  under  free  trade  all  our  population  would  go  into 
agriculture,  and  that  wages  and  all  other  remuneration  for  labor  would  be  re- 
duced until  we  should  all  be  in  poverty  together.  Hence  the  agricultmists, 
and  the  mechanical  laborers,  too,  are  exhorted  to  support  a  wide  protective 
system  in  order  to  diversify  industry  and  prevent  ruinous  comjjetition. 

"  We  have  seen  above  that  the  direct  cost  of  keeping  wp  the  protective  sys- 
tem consists  of  three  items  :  (1)  payment  of  custom-house  officers  to  keep 
goods  out  ;  (2)  support  of  Laborers,  and  jirofit  on  capital  in  protected  indus- 
tries ;  (3)  the  losses  of  the  protected  industries.  These  costs  must  be  paid  to 
buy  off  competition. 

"  In  the  first  place,  it  can  pay  no  one  to  buy  off  competition  unless  he  has 
a  monopoly.  Protected  industries  have  done  it.  sometimes.  American  farmers 
share  the  world's  market  with  a  number  of  strong  competitors.  If  they  buy 
off  the  competition  of  American  manufacturers  they  must  bear  all  the  cost  of 
it ;  and  they  must  share  the  gain,  if  any,  with  all  the  agriculturists  in  the 
world.  That  means  that  if  they  try  it  they  will  put  themselves  at  a  great 
disadvantage  with  their  own  competitors  in  the  world's  market." 

The  expense  of  custom-liouse  officers  is  too  trivial  to  be  consid- 
ered. The  support  of  laborers  and  profit  on  capital  in  protected 
industries  is  paid  out  of  the  exchangeable  value  of  their  products  : 
the  losses  of  the  protected  industries  consist  of  the  higher  cost  of 
their  products,  calculated  upon  present  prices  liere  and  abroad. 
It  amounts  even  now  to  very  little.  The  gain  to  tlic  nation  is 
the  whole  value  of  what  must  have  been  sent  abroad  to  purcliase 
those  products.  The  gain  to  the  agriculturists  is  a  certain  home 
market,  already  twice  as  great,  and  destined  in  twenty  years  to 
be  four  times  as  great,  as  the  market  of  the  woild  affords  him. 
They  now  sell  abroad  say  seven  hundred  milUons,  and  twelve 


30  TARIFF   COMMISSION. 

hundred  millions  at  home,  or  nineteen  hundred  millions.     This 

is  the  market  required  by  half  tlie  population.     The  whole  popula- 

tion  employed  on  the  soil  would  require  a  market  for  forty-eight 
hundred  millions.     Nowhere  on  this  planet  is  there  a  market  for 
one   half  the  amount ;  and  in  twenty  years  the   case  would   he 
twice  as  bad.     But  it  is  not  necessary  to  take  an  extreme  case, 
'  although  Mr.  Sumner  challenges  it.     We  need  only  inquire  into 
the  effect  of  offering  abroad  twice  as  much  as  we   do   now,  to 
be  convinced  that  the  purchasing  power  of  raw  products  would 
be  vastly  less  than  it  is  now.     The  farmer  does  not  lose,  but 
gains,  and  gains  immensely,  by  that  better  distribution  of  the 
community  which  the  necessities  of  his  argument   compel  Mr. 
Sumner  to  describe  as  "  buying  off  the  competition  of  the  manu- 
facturers."    By  favoring  such  a  distribution  the,y  have  not  put 
themselves  at  a  disadvantage,  as  compared  with  their  competitors 
in  the  foreign  market.     On  the  contrary,  the  resulting  wealth  of 
the  whole  nation  has  overflowed   upon  them,  and  given  them 
much  more  and  better  clothing,  tools,  and  machines  tlian  they 
could  possibly  have  obtained  under  a  regime  of  free  trade.     Tlie 
arrangement  has  helped  other  agricultural  countries,  doubtless  ; 
but  that  need  not  distress  us.     It  has  helped  ourselves  vastly 
more.     Paragraph  21  says  :  — 

"  In  the  second  place,  all  the  protected  industries  of  this  country  are  now 
parasites  on  the  naturally  strong  industries.  Agriculture  now  supports  itself 
and  all  the  rest  and  all  their  losses.  Therefore,  even  if  it  were  true  that  all 
the  population  would,  under  free  trade,  take  to  agriculture,  it  is  mathemati- 
cally certain  that  agriculture  could  support  them  all  better  directly  than  under 
the  present  arrangement." 

To  this  I  must  add  a  sentence  already  quoted  in  paragraph  3. 
It  is  this  :  — 

"  No  wonder  the  protectionists  are  enraged  at  the  economists  who  are  still 
stupidly  teaching  that  we  can  produce  nothing  except  by  applying  labor  and 
capital  to  land." 

There  is  nothing  in  this  to  enrage,  but  there  is  much  to  as- 
tonish and  amuse.     The  doctrine  is  that  of  the  Physiocrats  of 
France,  and  has  been  supposed  to  have  been  disposed  of  by  Adam 
Smith  in  his  lectures  one  hundred  and  thirty  years  ago.^     All  the 
1  See  Wealth  of  Nations,  Book  IV.  Chap.  IX.  §  28,  &c. 


TARIFF   COMMISSION.  31 

■world  thought  it  had  been  decently  buried,  but  Mr.  Sumner  with 
sacrilegious  hand  has  disinterred  it. 

Let  us  add  a  word  to  what  Adam  Smith  says.  As  already 
pointed  out,  the  United  States  produce  annually  seven  thousand 
millions  worth  of  finished  products.  Agriculture  and  mining  fur- 
nish the  raw  materials,  worth  three  thousand  millions ;  manul'ac- 
tures  and  the  mechanical  arts  bring  these  into  a  shape  suitable  for" 
consumption,  and  trade  and  transportation  place  them  where 
they  can  be  consumed.  Each  class  is  indispensable  to  the 
production  of  the  vast  aggregate.  It  is  in  vain  to  argue  that  the 
other  industries  could  do  nothing  without  raw  materials ;  for 
it  is  equally  true  that  agriculture  and  mining,  such  as  they  are 
to-day,  could  not  exist  without  the  machines,  the  admirable  tools, 
the  clothing,  the  barns  and  stores  and  dwellings,  and  the  trans- 
portation afforded  by  the  other  industries.  Nor  will  it  do  to 
affirm  that  these  fifty  millions  engaged  in  agriculture  could  pro- 
cure those  things  cheaper  and  better  from  abroad. 

No  such  conclusion  can  be  arrived  at  eitlier  by  the  theoretical 
deductive  reasoning  of  any  recognized  political  economy  of  to-day 
or  from  the  inductive  reasoning  of  practical  men.  Mr.  John 
Stuart  Mill,  were  he  alive,  would  feel  for  it  as  little  respecfr  as  is 
felt  by  statesmen  and  business  men.  It  not  only  is  not  practical 
wisdom  or  a  guide  to  practical  wisdom,  but  it  is  not  political 
economy  of  any  school,  save  one  which  has  been  forgotten  for  more 
than  a  hundred  years. 

Agriculture,  then,  does  not  support  itself  and  all  other  industries, 
and  therefore  it  is  not  mathematically  certain  that  it  would  sup- 
port us  all  better  directly  tlian  under  the  present  arrangement. 
It  is,  on  the  contrary,  as  certain  as  anything  can  be  made  by 
means  of  economical  reasoning  or  by  reasoning  from  observation, 
that  a  reversion  to  agriculture  and  trade  alone  would  rmIucc  by 
one  half  the  amount  of  necessaries,  conveniences,  and  luxuries 
now  enjoyed  by  the  people  of  the  United  States.  Paragraphs  22- 
28  read :  — 

"  Tlic  furmers  would  indeed  gain  a  great  deal  if  the  protected  people  ^vould 
keep  still  and  not  do  anything,  for  then  they  w^ould  at  least  waste  nothing. 
The  earnings  of  farmers  and  the  wages  of  laborers  would  then  not  l)e  reduced 
80  much  as  they  are  now.     The  protectionist  theory,  however,  is  that  it  in- 


32  TARIFF   COMMISSION. 

creases  wages  to  keep  on  an  occupation  which  wastes  capital  and  lessens  all 
the  time  the  goods  within  reach  of  the  population.  It  is  interesting  to  apply 
this  theory  to  some  other  cases. 

"  On  the  protectionist  theory  it  would  be  a  means  of  raising  wages  to  keep 
up  a  big  standing  army.  All  the  soldiers  would  be  withdrawn  from  competi- 
tion in  the  labor  market,  and  would  consume  while  producing  notliiiig.  In 
time  of  peace  they  would  not  be  destroying  anything  ;  but  in  time  of  war  they 
would  be  just  like  a  protected  industry,  —  they  would  be  wasting  capital  aU 
the  time.     In  that  case,  then,  they  would  raise  wages  all  the  more. 

"  On  the  protectionist  theory  a  leisure  class  of  idle,  rich  people  make  wages 
higher  than  they  would  be  if  the  same  people  should  go  to  work.  By  the 
same  reasoning  women  who  now  consume  without  producing  would  lower 
wages  if  they  should  go  to  work,  and  while  consuming,  as  they  now  do,  should 
compete  in  the  labor  market.  Indeed,  this  view  of  the  matter  is  very  often 
taken,  and  perhaps  the  popular  view  is  that  the  rich  make  wages  high,  if  they 
not  only  keep  out  of  the  labor  market,  but  also  consume  luxuriously,  and  do 
not  save  anything. 

"  On  the  protectionist  argument  paupers  living  in  an  almshouse  raise  wages 
as  compared  with  what  wages  would  be  if  the  same  persons  should  no  longer 
consume  unproductively,  but  should  come  out  and  compete  in  the  labor  mar- 
ket while  consuming  as  before.  On  the  same  argument  paupers  who  produce 
something,  though  less  than  they  consume,  lower  wages  compared  witli  what 
would  be  the  case  if  the  paupers  did  nothing ;  still  more  as  compared  with  the 
case  in  which  the  paupers  should  destroy. 

"  On  the  protectionist  argument,  convicts  in  the  state  prison  raise  wages  by 
consuming  the  product  of  taxation  in  idleness,  and  lower  wages  if  they  go  to 
work,  and,  while  consuming  as  before,  produce  something,  because  in  the  latter 
case  they  compete  in  the  labor  mai'ket.  In  fact,  criminals  out  of  state  prison 
would  satisfy  the  protectionist  reasoning  still  better.  They  always  destroy 
far  more  than  they  produce,  and  they  do  not  compete  with  laborers.  They 
would,  therefore,  raise  wages  by  their  operations.  It  would  be  a  limitation 
of  their  beneficent  action  to  put  them  in  prison  as  consumers  in  idleness,  still 
more  so  to  set  them  to  work  at  a  useful  industry. 

"  On  the  protectionist  view  of  the  matter  the  trade-unionists  are  right  when 
they  adopt  wasteful  processes,  practise  shiftlessness  and  neglect,  study  not  to 
be  skilful  or  effective,  and  try  to  make  work,  as  they  call  it,  believing  that 
they  thus  raise  wages.  The  protectionist  and  the  trades-unionist  both  mistake 
toil  for  wages.  They  think  that  when  they  increase  the  difficulties  which 
intervene  between  us  men  and  goods  they  increase  wages,  and  that  to  make 
goods  abundant  is  to  lower  wages. 

"  On  the  protectionist  theory  those  men  in  the  riot  at  Pittsburgh,  who  ex- 
ulted in  the  destruction  of  the  city  because  they  thought  that  it  would  make 
work,  which  they  confused  with  making  wages,  were  right  from  their  point 
of  view.  No  man  wauts  work  ;  that  is,  toil,  or  irksome  exertion.  Least  of 
all  does  the  man  who  has  no  capital  want  toil.     He  supplies  toil.     He  cannot 


TARIFF    COMMISSION.  33 

supply  and  demand  the  same  thing.  He  demands  capital  on  which  to  live. 
When  capital  is  destroyed  and  toil  is  necessary  to  reproduce  it,  the  ratio  in 
which  toil  must  be  given  for  capital  is  rendered  more  unfavorable  to  the  la- 
borer ;  that  is,  wages  fall.  If  they  do  not  fall  on  the  spot  where  the  destruc- 
tion took  place  they  must  fsill  elsewhere  whence  the  capital  is  drawn  to  replace 
the  capital  destroyed.  If  Pittsljurgh  had  to  be  rebuilt  other  cities  couid  be 
built  up  just  so  much  less.  If  Pittsburgh  had  not  been  burned  up  the  capital 
which  went  to  replace  it  would  have  been  used  to  employ  laborers  in  adding 
so  much  more  to  the  comfort  and  possessions  of  the  country.  The  country  is 
poorer  for  all  time  by  the  capital  there  destroyed,  with  all  its  accumulations. 
Just  so  every  year  that  this  nation,  on  account  of  the  protective  system,  attains 
to  the  possession  of  a  less  amount  of  goods  than  it  could  have  obtained  under 
freedom,  the  effect  is  the  same  as  if  we  had  produced  a  city  and  had  seen  it 
burn  up  ;  and  anybody  who  believes  that  the  protective  taxes  raise  ■\\'ages 
must  believe  that  to  burn  up  cities  raises  wages.  AU  these  notions  are  mis- 
erable fallacies,  which  sin  against  the  first  elements  of  common  sense.  He  who 
believes  that  the  way  to  raise  wages  is  to  hinder  people  from  getting  at  things 
easily  and  cheaply,  or  to  refrain  from  the  most  profitable  modes  of  obtaining 
goods,  must  believe  that  workmen  raise  wages  when  they  stop  working  and 
go  out  on  strikes,  and  lower  wages  when  they  go  to  work  again.  Trades-union- 
ism and  protectionism  are  falsehoods.  The  way  of  prosperity  for  human  so- 
ciety is  by  industry,  economy,  thrift,  skill,  energy,  painstaking,  excellence, 
liberty,  abundance,  and  not  by  some  crafty  and  artificial  devices  to  produce 
scarcity  and  bad  work.  The  protectionist  system  requires  a  new  set  of  prov- 
erbs which  have  never  yet  found  their  way  into  any  popular  philosophy,  such 
as  these  :  Want  makes  wealth  ;  destroy  and  prosper  ;  taxes  are  wages  ;  to  have 
much  produce  little  ;  blessed  are  the  bad  workman  and  the  foolish  capitalist, 
for  they  shall  get  abundance." 

I  have  already  shown  that  according  to  the  protectionist  theory 
the  whole  amount  which  would  be  sent  out  of  the  country  to  buy 
the  goods  now  made  in  it  by  protected  industries,  —  this  whole 
amount  less  the  amount  by  which  home-made  goods  exceed  in 
cost  the  foreign,  is  a  gain  to  the  country,  even  taking  prices  at 
their  present  point ;  for  the  labor  now  employed  would,  if 
transferred  to  the  laud,  reduce  the  exchangeable  value  of  the 
totality  of  raw  products,  —  it  would  be  a  minus  quantity.  Pro- 
tection therefore  increases  capital,  and  increases  all  the  time  the 
goods  within  reach  of  the  population.  The  theory  of  protection, 
then,  is  absolutely  the  reverse  of  wliat  Mr.  Sumner  alleges  it  to 
be,  and  it  is  a  theory  in  perfect  accord  with  methods  of  reasoning 
always  adopted  by  the  great  economists  excepting  when  they  are 
arguing  for  a  preconceived  opinion.     It  is  a  theory  also  whicli  is 


34  TARIFF   COMMISSION. 

in  harmony  with  facts.  It  explains  the  past  and  the  present,  it 
explains  with  precision  and  in  an  intelligible  manner  the  poverty 
of  Ireland  and  Portugal  and  Turkey  and  India,  and  why  all  purely 
or  disproportionably  agricultural  nations  and  states  are  poor,  &c. 
It  is  not  necessary,  then,  to  follow  Mr.  Sumner  into  the  side  issues 
of  paragraphs  22-28.  They  all  fail  to  be  analogies  in  every 
point  but  one,  and  it  w^ould  require  many  pages  to  examine  them 
in  detail.  I  will  notice  only  one  sentence.  Mr.  Sumner  says 
tliat  "  the  way  of  prosperity  for  human  society  is  by  industry, 
economy,  thrift,  skill,  energy,  painstaking,  excellence,  liberty, 
abundance."  But  abundance  in  political  economy  is  prosperity. 
The  way  of  prosperity  then,  according  to  Mr.  Sumner,  is  by  pros- 
perity. This  is  an  identical  proposition.  But,  abstaining  from 
taking  advantage  of  this,  let  us  strike  out  the  word  abundance. 
The  other  means  he  enumerates  would  certainly  not  lead  to 
abundance  or  prosperity  if  we  insisted  upon  producing  only  or 
even  more  largely  the  raw  products  with  which  the  world  is  al- 
ready oversupplied,  and  abstained  from  producing  the  finished 
products  we  ourselves  require,  and  wdiich  can  be  had  in  abun- 
dance only  through  our  own  labor.  The  new  set  of  proverbs 
which  Mr.  Sumner  offers  to  protection  are  borrowed  from  Bastiat's 
"  Sophisms  of  Protection,"  a  book  which  a  great  lawyer  once  said 
to  me  was  in  his  opinion  the  most  sophistical  work  he  had  ever 
read.  The  new  proverbs  are  totally  inapplicable,  and  protection 
declines  to  accept  them. 

The  precise  point  in  which  Mr.  Sumner's  reasoning  is  faulty  is 
the  assumption  that  prices  of  finished  products  abroad  would  re- 
main the  same  under  a  vastly  increased  demand,  and  that  the 
prices  of  raw  products  abroad  would  remain  the  same  under  a 
vastly  increased  supply.  None  of  the  great  economists  would 
indorse  such  an  assumption  ;  on  tlie  contrary,  the  metliods  of  rea- 
soning adopted  by  them  all  justify  the  protectionist  conclusions, 
and  warrant  them  in  affirming  that  the  exchangeable  value  of  the 
annual  product  of  the  United  States  is  vastly  increased  by  pro- 
tection. But  we  have  the  authority  of  Adam  Smith  and  Say 
and  Mr.  Mill  for  the  conclusion  that  the  exchangeable  value  of 
the  annual  product  is  precisely  equivalent  to  the  totality  of  the 
individual  incomes.    Protection  then  raises  all  incomes,  and  wages 


TAr.IFF    COMMISSION.  35 

among  the  others.  .There  does  not  appear  to  be  a  particle  of 
doubt  that,  according  to  the  accepted  economical  reasoning,  we 
ought  in  the  United  States  to  have  high  wages  in  consequence  of 
protection ;  and  experience  shows  that  we  have  high  wages  which 
bring  to  us  annually  three  fourtlis  of  a  million  of  people  from 
almost  every  country  of  the  earth.     Paragraph  29  runs  :  — 

"  Let  us  now  look  at  the  other  dogma  :  High  wages  make  protective  taxes 
necessary.  It  is  the  very  opposite  of  the  truth.  If  wages  are  high,  that  is  the 
reason  why  no  protective  taxes  are  needed,  even  if  they  might  be  in  some 
other  case.  In  Germany  the  protectionists  generally  allege  that  lower  wages 
in  Germany  than  in  England  are  a  proof  that  Germany  is  industrially  in- 
ferior, and  needs  protection  against  England.  The  protectionist  argument 
never  flags  on  account  of  any  little  variation  in  the  facts." 

This  argument  is,  I  believe,  borrowed  from  Mr.  David  A.  Wells, 
and  is  thus  answered  by  a  free-trade  writer,  Professor  Cairnes : 
"  Mr.  Wells  shows  that  lal^or  in  England,  though  much  higher 
than  in  most  European  countries,  and  in  particular  than  in  Russia, 
is  still  so  much  more  efficient  here  than  there,  that  the  hiii-h  En"- 
lish  rates  are  practically  cheaper  for  the  English  capitalist  than  the 
lower  continental  rates  for  the  capitalist  of  the  Continent.  What 
is  the  bearing  of  this  upon  the  American  demand  for  protection 
against  England  ?  Will  Mr.  Wells  maintain  that,  as  the  efficiency 
of  English  labor  is  to  that  of  Piussia,  so  is  the  efficiency  of  Amer- 
ican labor  to  that  of  English  ?  If  not,  how  does  his  objection  to 
the  protectionist  criterion  of  costs,  founded  upon  the  different 
degrees  of  industrial  efficiency,  affect  the  argument  ?  " 

In  short,  Mr.  Wells's  argument  was  this  :  If  in  the  case  of  Eng- 
land a  high  rate  of  wages  is  the  result  of  greater  skill  or  other 
greater  advantages  in  the  iron  and  textile  industries,  then  a  still 
higher  rate  of  wages  in  America  is  a  pi'oof  of  still  greater  skill  or 
other  advantages  in  the  iron  and  textile  industries,  or  generally 
in  tlie  conversion  of  raw  into  finished  products !  It  is  this  ab- 
surdity which  his  words  suggest  and  insinuate,  although  when 
confronted  with  it  he  would  say,  "  Oli,  no !  I  only  mean  that  if 
high  wages  are  paid  it  must  be  because  the  products  of  the  coun- 
try find  a  market  at  home  and  abroad  which  makes  it  possible  to 
pay  such  wages.  If  the  liberal  wages  now  paid  in  the  United 
States  to  the  iron  and  the  textile  industries  could  not  be  paid 


36  TARIFF   COMMISSION. 

under  free  trade,  this  only  proves  that  those  industries  are  car- 
ried on  at  a  loss,  which  loss  must  fall  upon  the  unprotected  in- 
dustries." The  answer  to  this  is,  that  the  industries  in  question 
produce  about  seven  hundred  and  fifty  millions,  or  one  tenth  of  the 
annual  product,  and  so  support  directly  and  indirectly  one  tenth 
part  of  the  population.  Were  it  not  for  these  industries  our  pro- 
duction of  raw  materials  must  be  increased  by  one  tenth,  that  is 
to  say,  by  an  amount  equal  at  present  prices  to  three  hundred 
millions,  and  the  demand  for  iron  and  textiles  in  the  outer  world 
would  be  increased  by  seven  hundred  and  fifty  millions.  There 
would  be,  then,  an  advance  in  finished  products  and  a  sharp  de- 
cline in  raw  products,  and  the  exchangeable  value  of  what  we 
had  to  offer  would  be  diminished  enormously.  Agriculture  not 
only  would  not  gain,  but  it  would  lo§e  immensely.  Paragraph  30 
reads :  — 

"  111  the  arguments  under  this  head  of  the  subject,  it  is  constantly  assumed 
that  wages  are  the  controlling  condition  in  production,  or  that  there  is  some 
direct  connection  between  the  wages  paid  and  the  value  of  the  product  or 
the  profits  of  the  capitalist  employer.  These  assumptions  are  false.  Sup- 
pose that  an  individual  comes  forward  and  claims  that  he  cannot  compete 
because  he  pays  higher  wages  than  a  foreign  producer.  When  has  any 
examination  ever  been  made  to  find  out  whether  such  person  has  an  adequate 
capital,  or  has  a  competent  knowdedge  of  the  business,  or  diligently  attends 
to  his  business,  or  has  located  his  establishment  wisely,  or  has  organized  his 
business  economically,  or  has  bought  bis  raw  material  judiciously,  or  has  kept 
up  with  improvements  in  machinery,  or  has  not  speculated  with  his  product 
unsuccessfully,  or  has  not  violated  some  one  of  the  other  conditions  of  suc- 
cess ?  The  wages  paid  are  but  one,  and  often  one  of  the  least  important 
conditions  of  production.  If  it  is  alleged,  as  it  constantly  is  in  this  contro- 
versy, in  a  sweeping  way,  that  American  industries  need  protection  because 
American  wages  are  higher  than  foreign  wages,  it  is  a  case  of  joining  a  very 
wide  inference  to  very  inadequate  premises.  What  are  the  comparative  con- 
ditions of  industry  in  America  and  elsewhere  as  regards  convenience  and 
cost  of  raw  materials,  quality  and  cost  of  machinery,  rent  of  land  used, 
character  of  the  climate  as  affecting  the  requirements  of  various  industries, 
national  character  as  respects  industry,  diligence,  sobriety,  intelligence,  &c.,  of 
laborers,  distance  from  the  market  or  convenience  and  cost  of  transportation, 
convenience  and  cost  of  natural  agents  (coal  or  water),  taxes  and  tax  system, 
the  security  afforded  by  the  excellence  or  otherwise  of  the  government,  &c. '? 
Surely  it  is  plain  that  these  things  are  the  conditions  of  production  ;  and  the 
comparative  money  rates  of  wages,  taken  apart  from  the  purchasing  power  of 
money,  or  the  efficiency  of  labor,  to  say  nothing  of  all  the  other  conditions 


TARIFF   COMMISSION.  37 

enumerated,  are  by  no  means  a  criterion  for  a  decision  whether  an  industry 
can  be  carried  on  successfully  or  not.  The  lists  of  comparative  wages  which 
have  been  made,  and  which  are  relied  upon  by  protectionists,  and  are  often 
accepted  by  free-traders  as  pertinent  to  the  issue,  and  perhaps  as  decisive  of  it, 
have  no  value  at  all  for  the  purpose.  The  employer  alleges  that  he  can  make 
no  profits  because  he  pays  high  wages.  He  assumes,  apparently,  that  wages 
and  profits  displace  each  other..  It  is, certain  that  they  do  nothing  of  the 
kind.  There  is  no  ascertainable  relation  between  wages  and  profits.  Wages 
are  paid  out  of  the  capital  during  the  period  of  production.  The  employer 
tries  to  keep  wages  down,  just  as  he  tries  to  keep  down  cost  and  waste  of  raw 
material  or  wear  of  machinery,  because  he  wants  to  economize  on  his  outlay. 
He,  of  course,  tries  to  minimize  every  outlay,  because  that  is  the  road  to  suc- 
cess in  the  competition  of  the  market,  and  to  maximum  profits.  The  price 
of  his  product,  when  he  gets  it  done,  will  be  determined  by  supply  and  de- 
mand on  the  market.  He  must  replace  his  capital,  and  then  he  will  find  out 
what  profit  he  has.  No  law  whatever  can  be  established  between  this  profit 
and  the  wages  which  were  paid  to  the  men  while  they  were  making  the 
article.  Profits  and  wages  may  both  be  high  or  both  low  at  the  same  time, 
or  one  may  be  high  and  the  other  low.  The  fact  is,  that  instead  of  one  bemg 
displaced  by  the  other,  they  most  always  go  together,  both  high  or  both  low 
at  the  same  time." 

In*  this  paragraph  Mr.  Sumner  succeeds  very  well  in  confusing 
the  reader  by  enumerating  a  great  many  other  things  which  affect 
the  cost  of  commodities,  perplexing  the  subject  by  using  the  very 
reverse  of  the  method  employed,  when  we  seriously  desire  to  as- 
certain the  plus  or  minus  effect  of  a  certain  cause. 

The  true  method  is  to  isolate  the  cause,  and  see  how  it  must 
act  when  taken  alone,  or  with  other  things  equal.  Well,  then, 
a  commodity  being  produced  is  offered  in  the  market  and  sold 
at  a  certain  price.  From  this  price  F,  the  foreigner,  has  to  de- 
duct the  cost  of  materials  and  x  wages,  and  what  remains  is 
profit.  From  this  price  A,  the  American,  has  to  deduct  tlie  cost 
of  materials  and  say  x  plus  y  for  wages.  The  additional  y  in- 
capacitates A  from  contending  with  F.  Higher  wages,  then,  are 
indisputably  a  reason  for  protection,  especially  when  we  recollect 
that  they  enter  into  the  cost  of  forming  fixed  capital  and  into  the 
cost  of  repairing  fixed  capital,  as  well  as  into  the  sums  paid  di- 
rectly for  the  work  performed  in  shaping  the  commodities.  It  is 
of  course  necessary  to  success  "  that  a  man  should  have  adequate 
capital,  a  competent  knowledge  of  his  business,  must  diligently 
attend  to  his  business,  must  organize  his  business  judiciously, 


38  TARIFF   COMMISSION. 

must  have  kept  up  with  improvements  in  machinery,  have  ab- 
stained from  speculating  with  his  product  unsuccessfully,  and 
have  not  violated  some  one  of  the  other  conditions  of  success ;"  in 
short,  he  must  be  well  enough  to  get  out  of  bed  and  sane  enough 
to  keep  out  of  the  lunatic  hospital.  But  all  these  things  are  as 
necessary  to  F  as  to  A.  They  have  nothing  to  do  with  the  ques- 
tion of  the  effect  of  a  higher  price  of  labor,  into  the  discussion  of 
which  they  are  brought. 

If  Mr.  Sumner  means  that  we  cannot  contend  with  England 
in  manufactures  because  we  do  not  attend  to  our  business,  it  may 
be  noted  that  we  are  the  same  race  of  men  as  beat  the  pauper 
farm-laborers  of  Europe  in  their  own  market.  It  is  fair  to  sup- 
pose that  we  should  use  as  much  diligence  in  the  one  occupation 
as  the  other.  If  he  says  no,  because  protection  makes  the  pro- 
tected manufacturer  careless,  the  answer  again  is  that  all,  or  very 
nearly  all,  protected  articles  are  very  much  cheaper,  upon  an 
average  of  years,  than  the  foreign  article  with  duty  added ;  and 
in  not  a  few  the  domestic  article  is  cheaper  than  the  foreign  arti- 
cle without  any  duty.  If  the  duty  made  the  protected  indus- 
tries thriftless,  in  spite  of  internal  competition,  we  should  have 
prices  remaining  continually  only  very  slightly  below  the  point 
at  which  they  can  be  imported  and  pay  duty.  If,  on  the  con- 
trary, he  means  that  we  are  more  careful,  more  skilful,  or  rap- 
idly becoming  more  skilful,  than  the  foreigner ;  that  our  general 
high  rate  of  wages  causes  a  careful  selection  of  the  most  skilful, 
and  great  attention  to  have  the  best  macliinery,  &c. ;  and  that 
this  being  so,  we  ought  to  be  able  to  manufacture  as  cheaply  as 
the  foreigner  in  spite  of  the  difference  of  wages,  —  the  answer  is, 
that  the  fact  of  prices  being  already  much  less  than  the  foreign 
commodity  with  duty  added,  is  sufficient  proof  that  the  duty  is  not 
preventing  our  advance,  in  the  desired  direction ;  that  we  have 
already  reached  the  goal  in  common  cottons,  locomotives,  agri- 
cultural machinery,  tools,  &c.,  and  nearly  reached  the  goal  in 
such  woollens  as  are  used  by  the  great  mass  of  the  people.  The 
duty  troubles  nobody  much  except  the  users  of  the  finer  cottons 
and  woollens  and  other  luxuries.  The  men  who  get  their  one, 
two,  or  three  dollars  a  day  feel  the  tariff  only  through  its  benefi- 
cent effects  upon  their  wages  ;  it  is  the  men  who  get  their  ten 


TARIFF   COMMISSION.  39 

and  twenty  and  thirty  dollars  a  day  who  are  very  erroneously 
•thinking  themselves  oppressed.  If  they  really  were  oppressed,  it 
might  be  reason  even  for  class  legislation ;  but  they  and  their 
families  would  spend  just  as  much  in  ostentation  were  there  no 
custom-house  in  the  country.     Paragraph  31  says  :  — 

"  It  is  much  more  to  the  point  to  notice  that  profits  are  higher  in  this  coun- 
try than  in  Europe.  We  ought  not  to  take  too  low  views  of  hiunan  nature  ; 
but  when  an  employer  pretends  to  bull  wages,  we  shall  not  believe  him  with- 
out examination.  When  we  notice  that  profits  are  high  in  this  country,  we 
can  understand  the  applicants  for  tariff  favors,  without  assuming  any  dis- 
interestedness. No  capitalist  wall  go  into  a  business  which  gives  less  profit 
than  some  other  which  is  open  to  him.  The  American  producer  does  not 
want  to  put  up  with  the  rates  of  profit  which  his  European  competitor  is 
satisfied  with.  He  wants  the  rate  which  he  could  get  if  he  went  into  one  of 
the  industries  which  are  favored  by  nature  in  this  country.  Instead  of  going 
where  he  could  get  it  on  a  natural  basis,  he  wants  the  law  to  tax  his  fellow-citi- 
zens to  give  it  to  him.  The  talk  about  wages  is  all  for  effect.  It  is  only  so 
much  smoke  and  noise  imported  into  the  contest  to  obscure  the  issue.  It  has 
had  no  little  effect,  because  no  one  has  taken  the  trouble  to  expose  it  in  de- 
tail. The  competitor  whom  we  fear  most  is  England,  in  which  country 
wages  are  higher  than  anywhere  else  in  Europe.  How  does  England  pay 
high  wages  and  beat  all  the  others,  if  high  wages  are  the  controlling  con- 
sideration ?  And  if  she  pays  higher  wages  than  the  continental  countries  and 
beats  them  all,  because  other  considerations  come  in,  why  may  we  not  pay 
higher  wages  than  she  and  beat  her,  at  least  in  our  home  market,  because 
other  considerations  come  in  ?  The  nearest  approach  to  pauper  laborers  in 
Europe  are  agricultural  laborers.  Our  farmers  send  their  products,  raised  by 
men  remunerated  at  American  rates,  and  pay  transportation,  and  beat  the 
pauper  laborers  in  their  own  home  market.  How  can  this  be  done  if  the  cri- 
terion of  possible  competition  is  the  comparative  rate  of  wages  ? " 

Mr.  Sumner  here  intimates  that  the  manufacturer  who  tells 
the  workingman  that  the  tariff  sustains  and  tends  to  increase 
wages  is  deluding  the  latter  with  a  statement  he  does  not  be- 
lieve, because  his  own  interest  is  to  have  wages  low.  Yes  ;  but 
it  is  also  his  own  interest  to  sustain  a  policy  which  makes  his 
industry  possible  in  spite  of  the  high  wages.  But  the  manufac- 
turers are  not  the  only  men  whom  ]\Ir.  Sumner  accuses  of  dis- 
honesty in  this  matter.  The  highest  statesmen  of  the  land  he 
believes  to  be  simply  telling  lies  when  they  speak  in  the  manner 
he  disapproves.  He  cannot  believe  that  there  are  any  men  who, 
looking  forward  to  the  time  M'hen  population  must  begin  to  press 


40  TARIFF  COMMISSION. 

upon  subsistence,  feel  it  to  be  of  the  greatest  possible  importance 
that  high  wages  should  continue  from  now  till  then,  and  that  the 
change  should  find  a  people  so  long  used  to  good  living  as  to  re- 
fuse to  descend  into  beggary.  I  am  sorry  he  thinks  such  senti- 
ments to  be  hypocrisy.  He  differs  from  Mr.  Mill  in  this  as  much 
as  he  does  in  political  economy. 

Mr.  Sumner  asks,  If  England  can  pay  higher  wages  than  the 
Continent  and  beat  the  Continent,  why  cannot  we  pay  higher 
wages  than  England  and  beat  England  ?  Answer :  Because 
England's  superiority  in  skill  more  than  counterbalances  the 
lower  wages  of  the  Continent,  while  we  have  not  a  similar  supe- 
riority over  her.  He  also  asks  how  our  farmers  compete  with 
European,  if  the  criterion  of  possible  competition  is  the  compar- 
ative rate  of  wages.  The  answer  is,  that  nobody  ever  said  that 
wages  were  the  criterion,  but  only  one  of  the  elements.  Tlie 
English  farmer  has  to  pay  three  times  as  much  in  rent  as  the 
American  farmer  pays  for  wages,  and  he  has  to  use  vastly  more 
labor  per  acre,  and  he  has  to  use  fertilizers.  When  manufactures 
and  the  mechanical  arts  have  a  similar  advantage,  they  certainly 
will  need  no  protection.     Paragraph  32  reads  :  — 

"  If  it  is  said  that  we  cannot  compete,  what  is  meant  ?  These  phrases  are 
allowed  to  pass  without  due  examination.  I  cannot  compete  with  my  infe- 
riors or  with  my  superiors.  I  cannot  compete  with  an  Irish  laborer  at  digging  a 
ditch,  and  I  could  not  compete  with  the  late  Mr.  Scott  in  running  a  railroad. 
Could  any  taxes  enable  me  to  run  a  railroad  as  Mr.  Scott  did,  and  to  earn  such 
remuneration  as  he  earned  1  Certainly  not.  No  taxes  can  possibly  enable  a 
man  to  compete  with  a  superior.  Could  any  taxes  enable  me  to  compete 
with  an  Irish  laborer  at  digging  a  ditch  ?  Indeed  they  could.  They  might 
interfere  between  me  and  the  laborer,  and  prevent  me  from  getting  his  ser- 
vices, and  I  might  be  forced  to  dig  my  own  ditch,  turning  away  from  other 
and  better  paid  occupations  to  give  my  time  to  an  inferior  occupation.  That 
would  impoverish  me.  Such  is  the  only  way  in  which  protective  taxes  can 
make  competitidVi  possible.  They  drive  us  down  to  compete  with  those 
who  are  far  worse  oflf  than  we  instead  of  allowing  us  the  full  use  of  our  nat- 
ural advantages." 

If  the  condition  of  things  were  such  that,  without  a  protective 
law,  so  many  persons  would  crowd  into  professorships  as  to  de- 
press the  exchangeable  value  of  their  services  below  those  of  ditch- 
diggers,  then  a  law  which  should  cause  some  of  those  would-be 


TARIFF   COMMISSION.  41 

professors  to  dig  ditches  would  increase  the  annual  product,  and 
raise  the  rate  of  wages.     Paragraph  33  says  :  — 

'•  If  we  have  high  wages,  then  they  are  a  proof  of  industrial  superiority. 
They  prove  that  there  are  some  lines  of  industry  open  to  us,  as  a  nation,  in 
which  great  returns  for  both  labor  and  capital  may  be  obtained.  To  argue 
from  high  wages  that  we  need  protection  is  like  arguing  that  a  man  needs 
charity  because  he  is  rich,  or  needs  help  because  he  is  strong." 

If  we  have  high  wages,  they  are  a  proof  that  we  have  a  wisely 
distributed  variety  of  industries  ;  that  we  have  not,  by  overdoing 
the  production  of  raw  products,  thrown  away  our  natural  advan- 
tages, so  as  to  go  half  clad  in  the  midst  of  fertile  fields.  To 
argue  from  high  wages  that  we  do  not  need  protection  is  like 
arguing  that  a  man's  methods  of  business  must  have  been  bad 
because  he  has  become  rich,  or  that  the  organization  of  a  victo- 
rious army  had  been  pernicious,  and  that  greater  success  would 
have  come  if  each  man  had  waged  the  war  by  himself.  ParaOTaph 
34  says  :  — 

"A  true  analysis  of  the  facts  therefore  shows  us  that  protective  taxes 
lower  wages,  and  that  high  wages  are  not  a  reason  why  protective  taxes  are 
necessary.  We  get  the  remuneration  of  labor  by  using  our  natural  advan- 
tages. The  remuneration  of  labor  is  high  because  the  advantages  are  great. 
It  will  be  highest  if  the  laborer  is  let  alone  to  use  the  advantages  without 
any  restraint  or  interference.  If  we  get  a  high  remimeration  by  the  use  of 
our  advantages,  our  strength  in  competition  will  come  from  the  very  advan- 
tages of  nature  which  gave  the  high  rewards  of  industry.  Thus  every  aspect 
of  the  matter  is  consistent  and  straightforward,  clear  and  natural.  The  more 
we  study  the  case  in  all  its  aspects,  the  more  thoroughly  is  the  free- trade 
solution  of  it  confirmed  ;  for,  instead  of  entangling  ourselves  in  ridiculous 
absurdities,  we  find  that  all  the  relations  are  simple  and  consistent." 

He  who  studies  Hamilton's  report  upon  manufactures  will  see 
that  he  expected  general  prosperity — that  is,  liigh  wages — to  flow 
from  protection,  and  why  he  expected  it.  He  who  studies  the 
United  States  to-day  will  see  that  the  event  has  justified  liLs  theory, 
and  he  will  see  that  his  theory  accords  with  the  wisest  thought  of 
the  great  writers  upon  political  economy.  We  get  a  great  remu- 
neration to  our  labor  by  using  and  not  throwiiig  away  our  natural 
advantages.  The  remuneration  of  labor  is  high  because  we  do 
not  press  those  advantages  beyond  the  ability  of  the  world  to 
absorb  their  products.     We  should  entirely  throw  away  those 


42  TARIFF   COMMISSION. 

advantages  if  the  laborers,  instead  of  acting  in  concert  for  the 
greatest  good  of  all,  had  each  acted  independently.  If  we  get  a 
high  remuneration  under  protection,  that  is  evidence  that  pro- 
tection was  needed,  and  will  be  needed  until  we  gain  a  skill  so 
much  greater  than  others  as  to  overbalance  the  greater  cost  per 
man  of  our  labor. 

Thus  every  aspect  of  the  matter  is  consistent,  straightforward, 
clear,  and  natural.  We  are  not,  like  the  free-traders,  confounded 
by  the  presence  of  prosperity  in  the  United  States  in  spite  of  and 
in  contradiction  of  all  our  theories,  nor  by  the  presence  of  the 
direst  poverty  in  Ireland,  Portugal,  Turkey,  and  India.  Para- 
graph 35  reads : — 

"  The  application  of  these  ideas  to  the  matter  in  hand  is  simple  and  direct. 
I  have  spoken  wholly  as  a  political  economist  whose  business  it  is  to  study 
theoretical  questions.  If  it  is  proper  to  do  anything  about  wages,  the  right 
thing  to  do  is  to  abolish  all  protective  taxes,  and  that  will  let  them  rise 
where  they  ought  to  be." 

The  author  of  this  review  of  Professor  Sumner's  paper  has 
written  wholly  as  a  political  economist  whose  business  it  has 
been  for  many  years  to  study  theoretical  questions.  It  is  of  the 
utmost  consequence  to  sustain  wages,  and  this  will  be  done  by 
continuing  the  protective  policy.  Otherwise  the  growth  of  our 
non-agricultural  industries  will  be  checked,  and  the  country  will 
become  disproportionately  addicted  to  farming,  with  a  constant 
diminution  of  the  profits  of  that  occupation  and  of  wages  and 
profits  in  all  occupations. 

We  have  now  finished  Mr.  Sumner's  paper.  He  had  after- 
wards a  long  conversation  with  the  Commissioners,  in  which  he 
repeated  that  protection  lowered  wages,  declared  that  New  Eng- 
land would  have  been  greatly  richer  had  there  never  been  any 
tariff,  and  that  the  South  was  about  to  greatly  harm  herself  by  in- 
troducing manufactures ;  and  he  scoffed  at  the  theory  of  Franklin, 
Adam  Smith,  and  Mr.  Mill  which  teaches  the  great  advantages  of 
frequent  industrial  centres  to  the  farming  population.  This  he 
dismissed  by  calling  it  the  famous  Truck  Farm  argument.  It  is 
not  necessary  to  go  through  those  conversations,  as  they  evolved  no 
new  point,  and  as  the  positions  above  referred  to  are  not  warranted 
by  any  reasoning  in  accordance  with  the  political  economy  of  the 


TARIFF  COMMISSION.  43 

latter  half  of  the  nineteenth  century  as  set  forth  by  Mr.  Mill  and 
by  many  authors  on  the  protectionist  side.  1  believe  there  is 
not  a  particle  of  doubt  that  protection  sustains  and  gradually 
raises  wages ;  that  New  England  and  the  whole  country  is  greatly 
richer  by  reason  of  it ;  that  the  South  is  doing  very  wisely  in  in- 
troducing manufactures;  and  that  the  "Truck  Farm  argument" 
is  sufficiently  justified  by  the  authorities  I  have  named,  by  all 
sound  economic  reasoning,  and  by  common  sense. 


(C 


PROGRESS  AND  POVERTY." 


I. 

In  "  Progress  and  Poverty "  Mr.  Henry  George  has  given  to 
the  world  a  brilliant  work,  admirably  written,  full  of  eloquence, 
radiant  with  the  noble  aspiration  of  diminishing  human  suffer- 
ing, and  absolutely  devoid  of  that  too  common  cowardice  which 
stops  at  each  sentence  to  consider  whether  the  words  about  to 
be  written  will  be  in  harmony  with  opinions  avowed  upon  the 
other  side  of  the  Atlantic. 

But  the  ability  and  earnestness  of  the  author  and  the  tre- 
mendous importance  of  his  subject  make  it  all  the  more  neces- 
sary to  examine  with  care  every  doubtful  premise  and  every 
questionable  deduction,  and  to  collect  what  evidence  we  can  as 
to  the  exactness  or  carelessness  of  his  methods  of  reasoning.  Of 
these  we  have  some  specimens  in  an  article  published  by  Mr. 
George  in  the  Pojmlar  Science  Monthly  for  March,  1880,  en- 
titled "  The  Study  of  Political  Economy."     In  this  he  says  :  — 

"  The  effect  of  a  tariff  is  to  increase  the  cost  of  bringing  goods  from 
abroad.  Now  if  this  benefits  a  country,  then  all  difficulties,  dangers, 
and  impediments  which  increase  the  cost  of  bringing  goods  from 
abroad  are  likewise  beneficial.  If  this  theory  be  correct,  then  the 
city  which  is  the  hardest  to  get  at  has  the  most  advantageous  sit- 
uation ;  pirates  and  shipwrecks  contribute  to  national  prosperity  by 
raising  the  price  of  freight  and  insurance ;  and  improvements  in  navi- 
gation, in  railroads  and  steamships,  are  injurious.  Manifestly,  this 
is  absurd." 

It  is  certainly  absurd,  but  the  absurdity  must  be  looked  for  in 
Mr.  George's  reasoning.  The  true  statement  should  be  this : 
One  of  the  effects  of  a  tariff  is  to  increase  the  cost  of  bringing 
certain  hinds  of  goods  from  abroad.     Nevertheless  a  tariff  is  said 


4  "PROGRESS   AND   POVERTY." 

to  be  beneficial.  If  so,  tlien  everytliing  which  increases  the  cost 
of  bringing  from  abroad  not  only  those  certain  goods,  but  all 
goods,  must  likewise  be  beneficial.  The  obstacles  he  mentions 
not  only  raise  the  price  of  a  particular  kind  or  kinds  of  goods, 
but  of  all  goods,  and  that  of  passage  also,  and  they  diminish  the 
value  of  all  exports.  The  railroad  and  the  steamship  facilitate 
every  sort  of  exchange,  but  this  does  not  prove  that  every  sort 
of  exchange  is  beneficial.  Eum,  opium,  small-pox,  and  leprosy 
do  not  become  desirable  because  distributed  by  rail  and  steamer  ! 
A  tariff  does  not  stop  all  exchanges,  but  only  some.  That  would 
be  a  droll  syllogism  which  ran :  "  If  to  stop  some  exchanges 
be  beneficial,  then  to  stop  all  exchanges  would  be  beneficial." 
Mr.  George  continues  thus  :  — 

"  And  then  I  looked  farther.  Tiie  speaker  had  dwelt  on  the  folly 
of  a  great  country  like  the  United  States  exporting  raw  material  and 
importing  manufactured  goods  which  might  as  well  be  made  at  home, 
and  I  asked  myself.  What  is  the  motive  which  causes  a  people  to  ex- 
port raw  materials  and  import  manufactured  goods  1  I  found  that  it 
could  be  attributed  to  nothing  else  than  the  fact  that  they  could  in 
this  way  get  the  goods  cheaper,  —  that  is,  with  less  labor.  I  looked 
to  transactions  between  individuals  for  parallels  to  this  trade  between 
nations,  and  found  them  in  plenty  :  the  farmer  selling  his  wheat  and 
buying  flour  ;  the  grazier  sending  his  wool  to  a  market  and  bringing 
back  cloth  and  blankets ;  the  tanner  buying  back  leather  in  shoes, 
instead  of  making  them  himself.  I  saw,  when  I  came  to  analyze  them, 
that  these  exchanges  between  nations  were  precisely  the  same  thing 
as  exchanges  between  individuals ;  that  they  were  in  fact  nothing  but 
exchanges  between  individuals  of  different  nations ;  that  they  were 
aU  prompted  by  the  desire  and  led  to  the  result  of  getting  the  greatest 
return  for  the  least  expenditure  of  labor  ;  that  the  social  condition  in 
which  such  exchanges  did  not  take  place  was  the  naked  barbarism  of 
the  Terra  del  Fuegians  ;  that  just  in  proportion  to  the  division  of 
labor  and  the  increase  of  trade  were  the  increase  of  wealth  and  the 
progress  of  civilization.  And  so,  following  up,  turning,  analyzing,  and 
testing  all  the  protectionist  arguments,  I  came  to  conclusions  which  I 
have  ever  since  retained." 

The  reader  who  is  familiar  with  the  Free-Trade  and  Protec- 
tionist controversy  \vill  need  no  one  to  point  out  the  weakness 
of  the  above  paragraph. 


"PROGRESS   AND  POVERTY."  5 

To  get  goods  cheaper  is  not  the  equivalent  of  getting  them  for 
less  labor. 

To  get  the  greatest  return  for  the  least  expenditure  of  a  small 
portion  of  its  labor  is  not  the  proper  aim  of  a  nation,  but  to  get 
the  greatest  Gross  Annual  Product  obtainable  by  the  whole  of 
its  available  labor.     This  is  a  very  different  matter. 

That  exchanges  and  division  pf  employments  find  place  in  all 
but  savage  societies,  does  not  prove  that  there  must  be  division 
of  employments  between  nations.  It  is  not  necessary  that  Eng- 
land should  make  up  all  our  raw  materials  while  we  confine 
ourselves  to  agricultural  pursuits.  We  are  numerous  enough 
to  derive  from  the  division  of  employments  every  possible 
advantage  among  ourselves.  No  man  can  be  certain  that  the 
increase  of  wealth  and  the  progress  of  civilization  are  "just  in 
proportion "  to  the  division  of  labor  and  the  increase  of  trade, 
because  these  tw^o  last  are  not  the  only  nor  even  the  chief  ele- 
ments in  civilization ;  but  even  if  they  were,  we  are  not  promot- 
ing the  division  of  labor  nor  the  increase  of  trade  in  the  United 
States  by  confining  ourselves  to  raising  raw  material. 

THE   OBJECT   OF  INTERNATIONAL  TRADE. 

The  object  aimed  at  in  trading  with  a  foreign  nation  is  to 
get  what  is  wanted  cheaper  in  the  sense  of  for  less  labor,  cer- 
tainly; but  this  object  is  attained  only  when  the  reciprocal 
desires  balance.  When  they  do  not  balance,  the  party  whose 
needs  are  the  greatest  in  amount  must  give  up  more  and  more 
of  any  advantages  arising  from  the  exchange,  and  may  have  to 
give  up  the  whole,  —  yes,  and  a  good  deal  more  than  the  whole  ; 
for  if  he  does  not  possess  the  skill  and  the  fixed  capital  he  cannot 
begin  to  manufacture  (which  is  his  only  defence)  until  the  other 
party  has  extorted  from  him  twenty  or  tliirty  or  more  per  cent 
over  the  rate  at  which  he  might  manufacture  for  himself  if  he 
had  the  skill  and  fixed  capital.  And  this  is  not  the  worst :  B 
needs  more  of  A's  goods 'than  A  will  take  of  his.  He  must  pay 
in  treasure  while  tliis  lasts.  He  may  produce,  if  you  please,  a 
hundred  millions  of  treasure  a  year ;  but  if  he  pay  out  two  hun- 
dred, he  will  soon  find  the  basis  of  his  machinery  of  exchange 
gone,  only  to  bo  recovered  after  years  of  loss  and  misery,  and 


6  "PKOGEESS   AND   POVERTY, 

he  will  find  that  he  must  go  ivitlwut  a  large  part  of  what  he 
might  have  enjoyed  through  his  own  industry.  He  can  per- 
manently obtain  from  abroad  only  so  many  goods  as  will  pay  for 
that  quantity  of  his  commodities  which  is  needed  in  the  outer 
world  at  the  lowest  price  at  which  he  can  afford  them.  These 
are  the  conditions  which  the  World  offers  to  fifty  millions  of 
people,  soon  to  be  a  hundred  millions.  If  it  were  bargaining  with 
five  millions  of  people  it  might  have  to  offer  better  terms.  This 
is  not  merely  protectionist  doctrine,  but  is  a  necessary  deduction 
from  the  propositions  regarding  international  trade  laid  down  by 
Mr.  John  Stuart  Mill.  But  Mr.  George  reasons  as  if  the  matter 
of  proportional  demands  or  requirements  had  no  place  in  political 
economy. 

The  reader  may  at  first  think  that  all  this  has  nothing  to  do 
with  "  Progress  and  Poverty ; "  but  it  has  much  to  do  with  Mr. 
George's  habits  of  thought,  and  these  have  shaped  his  book.  If 
we  find  him  making  about  free-trade  deductions  which  involve 
a  syllogism  with  four  terms,  —  or  a  universal  conclusion  drawn 
from  a  particular  premise,  or  the  like,  —  we  shall  be  prepared 
and  on  the  watch  for  similar  inaccuracies  in  the  book  we  are 
about  to  examine  ;  and  before  going  to  the  main  subject  it 
is  well  to  quote  from  page  270  of  "Progress  and  Poverty" 
the  following  :  — 

"  To  these  must  be  added,  in  the  United  States,  the  robbery  in- 
volved in  the  protective  tariff,  which  for  ^very  twenty-five  cents  it 
puts  in  the  treasury  takes  a  dollar-  and  it  may  be  four  or  five  out  of 
the  pocket  of  the  consumer." 

Now  the  duties  collected  have  some  years  been  over  two  hun- 
dred millions ;  there  must  then,  according  to  Mr.  George,  have 
been  at  least  eight  hundred  millions,  and  perhaps  four  thousand 
millions,  taken  by  the  tariff  from  the  pockets  of  the  consumers. 
These  Munchausen  figures  would  have  set  any  honest  man  like 
Mr.  George  upon  a  re-examination  of  the  statements  which  the 
aUies  of  the  Cobden  Qlubs  have  the  audacity  to  repeat  year  after 
year  in  the  face  of  repeated  refutations  ;  but  he  did  not  stop  to 
see  where  his  allegations  would  carry  him,  —  and  this  is  a  lamen- 
table fact,  as  it  throws  his  evident  uprightness  and  earnestness 


"PKOGRESS  AND   POVERTY."  7 

into  the  scales  which  are  heavily  weighted  with  falsehood  and 
frivolity.  The  fact  is  noted  in  no  hostile  spirit.  The  internal 
evidence  which  "  Progress  and  Poverty "  contains  of  the  pure, 
sino-le-hearted,  and  noble  motives  of  its  author  are  overwhelmin"-; 
and  his  object,  "  the  alleviation  of  human  misery,"  is  one  with 
which  every  true  man  must  sympathize;  but  the  higlier  the 
object  the  more  important  it  becomes  not  to  fall  into  error  as  to 
the  cause  of  the  evil  or  as  to  the  remedies  which  may  be  advan- 
tageously applied  to  it. 

THE   AMEEICAN   PROBLEM. 

Mr.  George  describes  eloquently  this  century's  increase  in 
wealth-producing  power,  and  thinks  that  if  a  Franklin  or  a 
Priestley  had  seen  it  in  a  vision  he  would  have  expected  the 
very  poorest  to  be  lifted  above  the  possibility  of  want,  —  he 
would  have  expected  to  see 

"Youth  no  longer  stunted  and  starved;  age  no  longer  harried  by 
avarice;  the  child  at  play  with  the  tiger;  the  man  with  the  muck- 
rake drinking  in  the  glory  of  the  stars !  Foul  things  fled ;  fierce 
things  tamed ;  discord  turned  to  harmony !  For  how  could  there  be 
greed  when  all  had  enough?  How  could  the  vice,  the  crime,  the 
ignorance,  the  brutahty,  that  spring  from  poverty  and  the  fear  of 
poverty,  exist  when  poverty  had  vanished  1  Who  should  crouch 
where  all  were  freemen;  who  oppress  where  all  Avere  peers'?" 

But  Franklin  and  Priestley  were  far  from  rhapsodists ;  they 
were  cool  and  wary  thinkers  and  observers.  They  saw  about 
them  much  vice,  crime,  ignorance,  and  brutality  that  were  the 
cause  of  poverty,  instead  of  being  caused  by  poverty,  as  Mr. 
George  assumes.  They  saw  much  poverty  which  need  not  then 
exist,  had  the  sufferers  been  as  free  from  vice,  crime,  ignorance, 
and  brutality  as  they  might  have  been  under  the  then  condi- 
tions of  society ;  they  saw,  indeed,  much  vice,  crime,  ignorance, 
and  brutality  which  even  then  had  not  the  apology  of  poverty; 
moreover,  they  would  have  foreseen  a  vast  increase  in  cities, 
where  temptations  are  more  numerous  and  restraints  less  power- 
ful ;  where  there  is  much  wealth  to  be  preyed  upon,  and  compara- 
tively great  opportunity  of  escaping  detection;  where  Charity 


8  "PROGRESS   AXD   POVERTY." 

rushes  about  eager  to  relieve  the  deserving,  and  often  carelessly 
giving  to  the  undeserving  the  funds  which  should  have  been 
better  bestowed ;  where  men  may  live  for  months  or  years  with- 
out knowing  who  lives  in  the  next  house ;  where  there  are  a 
thousandfold  more  opportunities  for  self-indulgence  than  in  the 
village  in  which  every  one  knows  every  one,  and  each  man  and 
woman  is  a  wholesome  restraint  upon  the  rest.  Franklin  and 
Priestley,  then,  would  hardly  have  expected  as  much  as  our 
author  believes  they  would  have  expected :  possibly  they  would 
not  have  expected  even  as  much  as  has  been  accomplished.  If 
they  could  have  foreseen  the  condition  of  society  to-day,  and 
compared  it,  class  for  class,  with  what  existed  in  their  times, 
they  probably  would  have  gone  down  to  their  graves  with 
bright  hopes  of  the  future.  They  would  have  seen  great  cities 
become  as  healthy  as  the  village  was  in  their  days,  and  they 
would  have  seen  a  great  and  a  general  advance  in  the  real 
wases  of  all  classes  of  those  who  are  able  and  willing  to  work. 
The  change  in  this  respect  is  most  striking,  and  is  within  the 
scope  of  the  personal  observation  of  all  who  can  look  back  thirty 
or  forty  years  with  a  clear  and  distinct  memory.  To  such  no 
statistical  proof  is  needed ;  but  such  proof  is  at  hand,  for  we 
have  careful  estimates  of  the  gross  annual  product  of  the  United 
States  each  ten  years,  and  by  these  we  find  that  there  was 
earned  enough  to  give  each  individual  $61  in  1840,  869  in  1850, 
S83  in  1860,  at  least  8110  in  1870,  and  at  least  8140  in  1880. 
Let  us  add  15  per  cent  to  1840  on  account  of  possibly  shorter 
enumerations  then  than  now.  Still  we  have  only  870  in  1840 
against  $140  now.  But  for  1880  we  have  not  only  estimates 
of  the  gross  annual  product:  we  have  also  those  of  the  total 
value  of  the  nation's  accumulations,  and  made  by  the  same  hand 
(Mulhall).  These  make  the  property  of  the  United  States  to  have 
been  forty  thousand  millions ;  and  this  valuation  was  made  at  a 
time  when  Government  could  borrow  at  4  per  cent,  and  when  few 
investments  could  be  made  to  safely  yield  5  per  cent,  and  when 
farmers  in  the  far  west  could  borrow  at  6  per  cent.  If,  then,  we 
take  into  consideration  the  fact  that  much  property  in  real  estate 
gave  no  return,  but  was  merely  held  for  a  market,  it  will  be  seen 
that  to  assume  the  whole  forty  thousand  millions  of  property  to 


"PROGRESS  AND   POVERTY.  9 

have  paid  its  owners  6  per  cent  will  be  to  err  so  miicli  on  the 
side  of  too  high  a  rate  as  to  cover  any  possible  error  which  may- 
have  crept  in  from  undervaluation  of  the  property  at  forty  thou- 
sand millions.  But  6  per  cent  upon  forty  thousand  millions 
gives  twenty-four  hundred  millions  (out  of  the  seven  thousand 
millions  of  gross  annual  product)  as  the  amount  going  in  the 
first  place  to  rent  and  profit. 

But  what  becomes  of  rent  and  profit  ?  On  the  average  of 
years  the  annual  product  is  used  up,  leaving  at  the  end  of  each 
year  the  same  percentage  of  stocks  of  commodities.  Eent  and 
profit  are  completely  passed  over  to  the  renderers  of  services 
which  do  and  services  which  do  not  issue  in  commodities.  They 
are  totally  spent  either  for  services,  or  for  commodities,  or  for 
property  which  is  expected  to  bring  in  an  income,  and  which  is 
formed  by  labor.  Nearly  all  of  the  seven  thousand  millions 
gets  into  the  hands  of  those  who  render  services,  of  those  who 
produce  commodities,  and  of  those  who  form  those  instruments 
of  production  and  of  convenience  which  are  exjoected  to  yield  a 
power  of  appropriating  a  portion  of  the  enhanced  annual  products 
of  future  years.  The  recipients  of  rent  and  of  profits  enjoy  the 
comfort,  the  consideration,  and  the  luxury  which  the  services  of 
a  large  mass  of  the  population  can  afford,  and  in  return  they 
pass  over  to  this  portion  of  the  population  nearly  the  whole  of 
their  share  of  the  gross  annual  product.  They  retain  nothing  to 
the  exclusion  of  the  rest  of  the  community  except  the  raw  mate- 
rials which  enter  *into  the  commodities  they  and  their  immediate 
families  consume.  Even  the  gross  total  of  their  receipts  is  regu- 
lated by  demand  and  supply,  and  can  only  be  a  portion  of  that 
which  the  community  derive  from  the  use  of  the  capital  (the 
fixed  and  floating  instruments  of  production  and  instruments  of 
convenience)  which  has  been  formed  out  of  their  savings.  With- 
out the  aid  of  these  instruments  even  Mr.  George  (see  p.  72) 
concedes  that  the  total  annual  product  could  be  only  a  small 
fraction  of  what  it  is  now ;  in  other  words,  that  it  is  of  supreme 
importance  that  these  instruments  should  be  kept  in  repair,  and 
that  new  ones  should  be  formed  to  meet  the  demand  of  the 
rapidly  increasing  population.  They  are  kept  in  repair  by  those 
who  live  within  their  incomes.  New  ones  are  formed  by  those 
who  save. 


10  "PROGRESS  AND   POVERTY." 

Without  the  instruments  of  production  now  in  use  Mr.  George 
declares  that  the  product  could  not  be  a  tithe,  or  a  tenth  part,  of 
what  it  is  now ;  that  is,  the  capital  produces  nine  tenths,  and, 
if  our  calculations  be  correct,  the  whole  people  get  two  thirds  of 
this  advantage,  and  the  owners  of  the  capital  get  one  third ;  but 
this  one  third  they  spend  in  such  a  shape  as  to  cause  the  exist- 
ence of  various  classes  who  are  not  employed  in  producing  neces- 
saries, and  whose  demand  for  necessaries  enables  those  who  do 
produce  them  to  procure  by  exchange  a  vast  amount  of  conven- 
iences and  luxuries,  and  to  be  thus  stimulated  to  make  the  earth 
yield  a  greater  amount  of  necessaries. 

PROPERTY  AS  AN  INCENTIVE  TO  PRODUCTION. 

Gut  of  the  institution  of  property,  then,  has  grown  both  the 
present  great  productive  power  and  also  the  distribution  of  the 
population  into  various  grades  of  wealth,  each  of  which  stimu- 
lates the  next  poorer  to  strive  to  better  its  condition ;  and  this 
beneficent  effect  should  be  seen  most  fully  in  the  United  States, 
where  the  almost  universal  sentiment  of  the  people  demands  the 
equal  or  nearly  equal  division  of  properties  among  the  children 
at  the  death  of  the  possessor.  Enormous  estates  are  said  to  have 
destroyed  Italy  and  the  provinces  of  the  Koman  Empire ;  but  it 
does  not  follow  that  there  should  be  no  estates  and  no  landlords, 
and  it  is  to  be  feared  that  Mr.  George  is  giving  fatal  advice  to 
the  already  sufficiently  miserable  Irish.  Native  landlords  living 
on  their  estates  and  using  Irish  products  would  speedily  change 
the  wliole  aspect  of  that  island.  The  abolition  of  landlords  will 
indefinitely  postpone  her  resurrection. 

For  the  purposes  of  this  discussion  an  improved  farm  is  as 
much  an  instrument  of  production  as  a  power-loom,  and  so  is  a 
store  in  Broadway.  The  position  of  this  last  may  be  such  that 
the  land,  apart  from  the  building,  possesses  great  exchangeable 
value ;  but  the  totality  of  such  ground  rents  form  but  a  small 
part  of  the  value  of  the  annual  product,  —  nine  tenths  of  which 
product  Mr.  George  calculates  to  be  due  to  the  efficiency  lent  to 
labor  by  capital.  Such  ground  rents  are  what  Mr.  Wm.  Lucas 
Sargant  calls  ascending  rents.  They  spring  from  the  imiirove- 
ment  of  the  productive  forces  of  the  community,  and  in  this  are 


"PROGRESS   AND   POVERTY."  11 

totally  unlike  the  descending  rents,  which  may  come  into  exist- 
ence where  population  presses  upon  the  means  of  subsistence. 
The  former  are  the  accompaniment  of  national  growth  and  pros- 
perity ;  the  latter  are  an  indication  of  national  decay. 

Out  of  the  twenty-four  hundred  millions  which  is  assumed 
as  having,  in  1880,  gone  in  the  first  place  to  rent  and  profits, 
probably  one  half  went  for  services  not  issuing  in  commodities, 
—  such  as  those  of  actors,  artists,  barbers,  clergymen,  clerks, 
copyists,  hotel-keepers,  dentists,  designers,  draughtsmen,  domes- 
tic servants,  civil  engineers,  gardeners,  government  officials  (in 
taxes),  hostlers,  intelligence-office  keepers,  journalists,  laundresses, 
librarians,  lawyers,  managers,  musicians,  nurses,  physicians,  pro- 
fessors, restaurant-keepers,  teachers,  surgeons,  and  so  on. 

The  otlier  half  must  have  gone  to  the  butchers,  bakers,  con- 
fectioners, carriage-makers,  furniture-makers,  blacksmiths,  car- 
penters, tailors,  etc.,  etc.,  who  furnished  commodities ;  and  a  little 
reflection  will  show  that  less  than  half  of  the  value  of  these 
would  upon  the  average  consist  of  raw  materials.  We  have  then, 
at  most,  only  six  hundred  millions  consumed  by  the  owners  of 
property  to  the  exclusion  of  tlie  rest  of  the  community  ;  six  hun- 
dred out  of  seven  thousand,  which  last  is,  according  to  Mr.  George, 
ten  times  more  than  could  be  produced  without  capital.  This 
includes  the  cases  of  all  recipients  of  profits  and  of  all  recipients 
of  rent,  and  tlie  latter  includes  the  rent  of  improvements  as  well 
as  ground  rent.  The  reader  will  then  see  that  ground  rent,  from 
the  abolition  of  which  Mr.  George  expects  the  return  of  the  golden 
age,  is  altogether  too  minute  to  produce  any  perceptible  harm; 
while  the  commission  of  so  stupendous  a  breach  of  public  faith 
would  be  likely  to  lessen  the  general  confidence  in  the  stability 
of  individual  fortunes,  and  in  this  way  to  diminish  the  effective 
desire  for  accumulatio'n  which  lies  at  the  very  foundation  of 
national  prosperity. 

WAGES   INCREASE   WITH  .PRODUCTION, 

We  appear,  then,  to  have  arrived  at  the  conclusion  that  more 
than  nine  tenths  of  the  gross  annual  product  goes  directly  or  in- 
directly to  those  who  labor  with  the  hands  or  with  the  head ; 
and  this  is  so  near  the  whole,  that,  for  purposes  of  comparison. 


12  "PROGRESS   AND   POVERTY." 

we  may  say  that  the  great  wage  fund  of  the  entire  community 
is  the  gross  annual  product,  or,  at  all  events,  that  in  com- 
paring different  periods  the  wages  fund  is  in  proportion  to  the 
annual  products.  Now  the  most  we  could  make  out  for  1840 
was  an  average  of  $70  per  head  for  the  whole  population ;  the 
least  which  seems  probable  for  1880  is  $140  per  head.  Gold 
may  have  depreciated  since  1840,  but  not  enough  to  account  for 
a  quarter  part  of  this  difference ;  and  we  are  forced  to  the  con- 
clusion that  real  wages  must  have  risen  immensely ;  and  this 
is  what  the  personal  observation  of  each  individual  and  what 
statistics  in  detail  bear  witness  to.     The  question  then  — 

"Why,  in  spite  of  increase  in  productive  power,  do  wages 
tend  to  a  minimum  which  will  give  but  a  bare  living  ? "  which 
Mr.  George  propounds  as  "  the  riddle  which  the  Sphinx  of  Fate 
puts  to  our  civilization,  and  which  not  to  answer  is  to  be  de- 
stroyed,"—  this  question  appears  to  have  no  existence  out  of  his 
imagination.  Wages,  fees,  salaries,  emoluments  of  every  kind, 
have  risen  every  ten  years.  They  were  higher  in  1850  than  in 
1840,  again  higher  in  1860,  and  very  much  higher  in  1880. 
At  each  period  there  was  more  to  divide,  and  every  portion  of 
the  community  obtained  a  larger  dividend,  —  every  portion,  that 
is,  in  which  no  exceptional  or  temporary  causes  overcame  the 
general  swing  of  financial  events. 

The  problem,  then,  for  the  solution  of  which  Mr.  George  wrote 
his  eloquent  book  seems  not  to  exist.  It  appears  that  wages  do 
not  tend  to  a  minimum,  but  that,  on  the  contrary,  they  are  con- 
stantly and  steadily  increasing  if  we  examine  them  at  consider- 
able intervals  and  under  similar  circumstances :  it  would  appear 
that  "  where  population  is  the  densest,  wealth  greatest,  and  the 
machinery  of  production  and  exchange  most  highly  developed," 
we  do  not  "  find  the  deepest  poverty,  the  sharpest  struggle  for 
existence,  and  the  most  enforced  idleness."  His  proposition  is 
universal,  and  is  demolished  the  moment  we  compare  Ireland 
with  England,  or  Portugal  with  France,  or  the  farmer  of  fifty 
years  ago  with  the  farmer  now,  or  the  domestic  servant  and 
'longshoreman  of  those  days  with  the  same  classes  to-day. 


"PROGRESS  AND   POVERTY."  13 


n. 

But  although  it  appears  quite  certain  that  all  classes  who  are 
able  and  willing  to  work  have  shared  in  the  great  increase  of 
opulence  which  has  during  the  last  century  resulted  from  the 
greater  security  of  property  and  the  introduction  of  machinery 
and  the  division  of  employments,  still  it  is  equally  certain  that 
the  progress  has  not  been  continuous.  It  has  been  in  waves. 
Each  wave  has  run  higher  than  the  last ;  but,  during  the  reflux^ 
there  has  been  distress  enough  to  wring  the  heart  of  any  one 
who  observed  it  at  its  focus  in  the  poorer  quarters  of  a  great 
city.  It  is  in  vain  to  answer  that  this  is  a  trivial  matter  com- 
pared to  the  famines  and  consequent  pestilences  that  used  to 
attend  short  crops,  and  that  still  attend  them  in  nations  which 
modern  trade  prevents  from  attaining  a  diversity  of  occupations. 
It  is  in  vain  to  point  to  Ireland  and  Orissa  and  Behar  and  the 
Punjab  with  their  many  millians  of  victims ;  for,  although  we 
have  passed  from  the  scene  of  such  horrors,  the  evil  which  re- 
mains is  great  enough  to  demand  that  we  use  every  effort  to 
discover  and  remove  its  causes. 

THE   REAL   PROBLEM 

would  seem  to  be  to  ascertain  why,  during  the  advance  of  modern 
society  from  one  plane  of  opulence  to  another,  there  should  occur 
periods  of  depression  in  which  a  considerable  portion  of  the 
population  suffers  want  of  employment  and  all  consequent  evils 
for  periods  of  several  consecutive  years. 

At  the  bottom  of  the  whole  trouble  lie  the  imperfect  informa- 
tion and  consequent  imperfect  judgment  of  individuals. 

A  market,  whicli  has  been  for  some  time  closed,  is  opened. 
A  manufacturing  and  commercial  nation  hastens  to  send  goods 


14  "PKOGRESS  AND   POVERTY." 

to  it.  They  pay  a  profit.  Then  all  prudence  is  cast  to  the  winds; 
immense  supplies  are  poured  upon  the  market  and  forced  upon  it 
by  long  credits  and  all  the  devices  of  trade.  The  thing  is  over- 
done. The  comparatively  agricultural  nation  has  taken  vastly 
more  than  it  can  pay  for  in  goods.  It  has  to  pay  in  treasure, 
and  this  sort  of  trade  at  last  comes  to  an  end ;  but  not  until  the 
buying  nation  has  suffered  a  disarrangement  of  its  machinery  of 
exchange  which  keeps  it  in  a  state  of  paralysis  for  years. 

We  suffered  this  after  the  war  of  the  Revolution  and  after  the 
war  of  1812-15. 

But  there  is  another  field  in  which  the  inaccurate  judgment 
of  men  would  bring  about  excitement  and  subsequent  depression, 
even  if  there  were  no  such  thing  as  trade. 

The  efficiency  of  modern  labor  springs,  in  a  great  measure, 
from  the  aid  given  by  fixed  and  floating  capital ;  and  the  dis- 
position to  save  —  or  to  form  capital  —  is  stimulated  by"  the 
manifold  instruments  of  convenience  and  luxury  which  increas- 
ing opulence  bestows. 

AMERICAN   CAPITAL  AND   POPULATION. 

But,  in  a  country  like  the  United  States,  the  desire  to  save  finds 
wide  scope.  The  population,  and  its  effective  demand  for  capital, 
increase  at  the  rate  of  three  per  cent  annually.  If,  then,  we  take 
the  value  of  all  capital  and  of  all.  improvements  on  land  to  have 
been  $30,000,000,000  in  1880,  the  average  demand  for  new  capi- 
tal and  improvements  would  be  to  the  amount  of  $900,000,000  ; 
that  is,  commodities  would  every  year  be  exchanged,  not  for  other 
commodities,  but  for  labor  employed  in  forming  new  property, 
to  this  enormous  extent. 

At  the  commencement  of  a  period  of  excitement  more  than 
this  would  be  invested,  and  with  profit ;  then  more,  while  the 
prudent  shook  their  heads.  But  perhaps,  nevertheless,  a  profit 
M'ould  ensue ;  and  so  on  until  the  formation  of  instruments  of 
production  and  convenience  is  carried  beyond  the  point  where 
society  can  and  will  pay  for  their  use  enough  to  satisfy  the  desire 
for  profit  current  in  the  community.  Up  to  this  point  there  has 
been  a  greater  and  greater  demand  for  commodities,  and  con- 
sequently for  labor  to  form  commodities.     Now,  suddenly,  the 


y  "PROGRESS   AND   POVERTY."  15 

movement  to  form  more  improved  farms,  more  mills,  forges, 
machinery,  etc.,  is  diminished,  and  the  labor  which  was  forming 
them  is  set  adrift  and  is  unable  to  consume  as  largely  as  be- 
fore ;  and  so  less  commodities  are  required,  and  less  labor  to  form 
commodities.  Here  we  have  a  glut,  a  panic,  and  a  period  of 
depression. 

Rent  has  had  nothing  to  do  with  the  movement  except  as  one 
of  the  closing  effects.  As  the  keener-sighted  see  that  too  much 
fixed  capital  is  being  formed,  they  may  rush  upon  real  estate  as 
a  means  of  securing  some  income  ;  and  this  speculation  may  run 
very  wild,  because  when  A  buys  B's  real  estate  his  doing  so 
does  not  diminish  a  particle  the  aggregate  of  funds  seeking  in- 
vestment. He  simply  transfers  them  to  B.  But  such  a  specula- 
tion is  an  effect,  not  a  cause,  of  the  movement  which  is  about  to 
culminate  in  a  collapse.  This  would  come  to  pass  just  the  same 
if  real  estate  were  never  either  bought  or  sold. 

THE   MOTIVE   OF  GEORGE'S   BOOK. 

A  collapse  of  this  kind,  aggravated  by  over-importations  and 
by  a  simultaneous  contraction  of  the  currency,  occurred  in  1873, 
and  continued  in  greater  or  less  intensity  until  1879  ;  and  it  was 
during  these  years  that  Mr.  George  saw  the  misery  which  caused 
him  to  write  his  eloquent  book.  Unhappily,  he  seems  to  have 
entirely  missed  the  nature  and  causes  of  the  disease,  and  to  have 
equally  erred  in  the  remedy  he  prescribed. 

During  this  period  of  depression  he  saw  "  gaunt  Famine  side 
by  side  with  the  gilded  palace,"  etc. ;  but  the  construction  of 
the  gilded  palace  in  no  way  'hastened  or  contributed  to  the 
collapse.  On  the,  contrary,  it  tended  to  postpone  and  moderate 
the  collapse ;  and  tlie  construction  of  a  thousand  such  at  the 
proper  moment,  accompanied  by  similar  expenditure  in  other 
directions,  might  have  totally  averted  the  miseries,  losses,  and 
wreck  which  filled  the  period  from  1873  to  1879.  Tliey  could 
not  have  been  averted  nor  have  been  postponed  for  a  moment 
by  the  confiscation  of  landed  property  or  any  other  property. 

Let  us  pass  now  to  what  Mr.  George  lias  to  say  aliout  cai)ital. 

Mr.  George  is  particularly  unfortunate  in  his  use  of  the  rcdudio 
ad  absurdum. 


16  "PROGRESS   AXD   POVERTY." 

In  examining  his  free-trade  notions  we  have  seen  him  brush 
aside  the  opinions  of  Washington,  Franklin,  Hamilton,  Jefferson, 
Jackson  —  in  short,  of  the  majority  of  the  statesmen  and  people  of 
the  United  States  —  by  a  few  phrases  which  to  him  appeared  to  be 
a  reduetio  ad  absurdum,  but  which  a  brief  examination  showed  to 
be  only  a  false  syllogism.  In  writing  of  "Capital"  he  dismisses  all 
previous  political  economists,  both  free-trade  and  protectionist,  in 
a  similar  manner.  He  finds  their  propositions  absurd  —  in  hold- 
ing labor  to  be  supported  by  capital  — "  because  they  involve 
the  idea  that  labor  cannot  be  exerted  until  the  products  of  labor 
are  saved,  —  thus  putting  the  product  before  the  producer,"  and 
this  he  repeats  several  times  in  different  words.  Let  us  put  this 
into  a  syllogism. 

The  producer  of  capital  cannot  be  dependent  for  support  upon 
the  subsequent  product. 

Labor  is  the  producer  of  capital,  tlierefore  labor  cannot  be 
dependent  for  support  upon  capital;  but  labor  in  the  minor 
premise  is  undistributed,  while  in  the  conclusion  it  is  distrib- 
uted.    It  is  a  false  syllogism. 

The  labor  which  precedes  and  produces  certain  capital  is  not 
the  labor  which  is  supported  by  that  same  capital,  but  quite 
another  labor.  There  is  nothing  absurd  in  supposing  that  the 
crops  raised  by  certain  labor  in  1882  may  support  and  be  ab- 
solutely necessary  to  the  support  of  that  other  labor  which  raises 
the  crops  of  1883.  The  confusion  of  thought  lies  with  Mr. 
George,  and  not  with  those  whom  he  criticises. 

Through  many  pages  upon  "  Capital "  he  labors  to  show  that 
"  v/ages  are  not  drawn  from  capital  at  all,  but  come  directly  from  the 
produce  of  the  labor  for  which  they  are  paid."  But  the  real  wages 
of  the  laborers  are  the  food,  raiment,  shelter,  etc.,  for  which  they 
spend  their  wages.  These  are  produced  hefo7'e  they  are  used. 
They  are  advanced  by  the  capitalist,  who  is  reimbursed  only 
when  the  articles  or  the  property  formed  by  labor  are  finished 
and  put  upon  the  market  and  sold. 

That  industry  cannot  exceed  the  amount  which  previously  ex- 
isting means  can  support,  is  plain  enough ;  but  in  point  of  fact 
there  always  exists  in  an  industrial  society  sufficient  commodities 
to  carry  the  community  to  the  next  harvest  and  somewhat  beyond. 


"PROGRESS  AND   POVERTY."  17 

Industry,  then,  is  not  limited  by  capital,  but  both  it  and  capital 
are  limited  by  the  field  of  em'ployment. 

Underneath  this,  and  limiting  it,  lie  the  desires  for  the  grati- 
fication of  which  the  community,  as  a  whole,  will  work  and  save. 
If  it  desire  only  bananas  and  bamboo  huts,  or  mere  necessaries, 
it  will  remain  without  progress  and  without  wealth.  If  it  desire 
the  manifold  conveniences,  luxuries,  and  amusements  now  en- 
joyed in  the  United  States,  it  will  continually  work  towards  the 
attainment  of  them  as  increasing  skill,  dexterity,  judgment,  and 
capital  bring  nature  more  and  more  under  dominion.  But  at  no 
point  of  time,  between  the  two  conditions,  has  it  been  true  that 
there  existed  an  unlimited  demand  for  any  one  or  for  all  the 
commodities  known  to  the  community.  At  any  given  moment 
the  demand  is  limited  to  such  quantity  of  commodities  as  can 
be  obtained  by  a  given  amount  of  effort ;  and  it  is  still  further 
limited  by  the  desire  to  provide  for  the  future,  —  the  desire  to 
save. 

Without  this  desire  there  can  be  none  of  that  progress  which 
grows  from  the  greater  efficiency  given  to  labor  by  fixed  and 
floating  capital ;  that  is,  by  those  instruments  of  production  and 
of  convenience  which,  according  to  Mr.  George  himself,  enable 
the  community  to  produce  a  product  ten  times  greater  than  it 
could  unaided.  But,  at  any  moment,  capital  is  of  limited  effi- 
ciency, and  demand  and  supply  will  award  it  only  a  portion  of 
that  which  it  adds  to  the  annual  product.  With  a  given  popu- 
lation and  a  given  efficiency  of  capital  the  latter  cannot  be  in- 
creased indefinitely.  Beyond  a  certain  point  a  larger  amount 
must  either  rest  unemployed,  or  divide  with  that  before  existing 
the  same  portion  of  the  annual  product,  —  thus  diminishing  tlie 
profits  of  the  whole.  There  is,  then,  in  every  industrial  com- 
munity, at  each  point  in  its  development,  a  limit  to  the  field 
of  employment,  even  if  it  be  in  possession  of  immense  unde- 
veloped resources.  The  English  economists  generally  (and  ]\Ir. 
George  follows  their  lead)  suppose  that  there  is  only  one  limit ; 
namely,  that  which  is  found  in  a  scarcity  of  land,  mines,  etc. 
Whether  this  limit  has  ever  been  reached  in  any  existing  indus- 
trial community  seems  doubtful ;  that  it  has  not  been  reached 
in  the  United  States  seems  quite  beyond  doubt. 

3 


18  "PROGRESS  AXD  POVERTY." 

It  is  idle,  then,  to  attribute  the  fluctuations  in  amount  of 
employment  to  a  deficiency  of  laud  brought  about  by  specu- 
lation. 

The  normal  limit  to  the  field  of  employment  is  passed  when 
the  desire  to  save  forms  capital  faster  than  the  population  and 
its  effective  demand  incred^s.  The  excess  of  employment  in 
this  direction  causes  an  excess  of  production  of  commodities, 
and  a  farther  excess  in  the  employment  of  what  is  called  pro- 
ductive labor. 

During  the  corresponding  depression  employment  shrinks  be- 
neath its  normal  limit,  and  continues  less  than  the  average  until 
the  population  has  gained  upon  capital  or  has  changed  its  habits 
of  expenditure.  Unemployed  capital  and  labor,  during  a  period 
of  depression,  are  constantly  looking  for  new  commodities  and 
new  services  with  which  to  temjDt  the  savers  (great  and  small) 
to  increase  their  expenditure ;  the  savers,  meanwhile,  vie  with 
each  other  for  the  possession  of  any  property  which  yields  a 
sure  income ;  and  those  in  whom  the  desire  to  save  is  least  are 
crowded  out  and  give  up  trying  to  accumulate,  —  until  at  last  it 
begins  to  be  apparent  that  more  fixed  capital  is  needed.  Then 
commences  another  expansion,  to  be  followed,  after  a  longer  or 
shorter  period,  by  another  collapse. 

The  violence  of  these  fluctuations  will  doubtless  diminish 
in  proportion  as  the  community  obtains  correct  views  of  the 
relative  magnitvde  of  the  industrial  forces,  —  of  the  amounts  of 
fixed  and  floating  capital,  —  the  average  quantity  of  unemployed 
capital  in  the  shape  of  unsold  stocks  of  commodities  and  of  ma- 
terials awaiting  conversion  into  commodities,  etc. ;  and,  mean- 
while, some  considerable  mitigation  might  be  afforded  if,  during 
times  of  excitement,  the  general  and  State  and  city  and  village 
governments  abstained,  as  far  as  possible,  from  expenditures 
for  improvements,  and  reserved  their  means  for  times  of  de- 
pression. 

To  lay  all  taxes  upon  real  estate  would  give  governments 
enormous  revenues  during  periods  of  excitement,  when  to  use 
them  would  be  prejudicial,  and  leave  it  without  a  large  portion 
of  its  necessary  revenue  during  periods  of  depression,  when  ex- 
penditures would  be  beneficial.     How  much  could  be  collected 


"PROGRESS   AND   POVERTY."  19 

from  taxes  upon  land  during  periods  when  land  is  so  depressed 
that  mortgaged  property  sold  under  foreclosure  fails  generally 
to  pay  its  debts  ? 

CONFUSIONS   OF   THOUGHT. 

In  his  chapter  on  "  Capital "  MrRJeorge  accuses  all  past  econo- 
mists of  confusion  of  thought ;  but  his  own  errors  in  this  respect 
seem  to  outweigh  those  of  all  other  writers  put  together. 

He  thinks  it  foolish  to  suppose  that  the  capital  produced  in 
1882  should  support  the  labor  of  1883,  but  finds  nothing  un- 
reasonable in  saying  that  the  man  who  is  at  work  upon  an 
unfinished  steamship  "virtually  produces  the  things  in  which 
he  expends  his  wages." 

But  the  things  for  which  he  expends  his  wages  were  created 
"before,  he  did  his  work,  created  by  the  previous  joint  efforts  of 
antecedent  labor  and  capital.  They  belonged  to  capital,  which 
had  furnished  the  instruments  of  production  and  advanced  the 
wages  and  kept  the  instruments  of  production  in  repair.  If 
what  remained  was  more  than  the  profit  usual  in  the  commu- 
nity, it  would  indicate  that  population  had  outgrown  capital,  — 
that  more  capital  was  needed.  To  construct  this  capital  more 
labor  would  be  called  for,  and  wages  would  rise. 

That  is,  labor  (of  all  kinds)  and  capital  and  rent  divide 
between  them  the  total  gross  product.  When  this  increases, 
wages  and  profits  and  rents  increase.  When  this  diminishes 
they  all  must  submit  to  a  diminution.  The  proportions  of  the 
gross  product  which  go  to  one  or  the  other  are  determined  by 
demand  and  supply.  If  capital  be  relatively  scarce,  capital  takes 
a  larger  percentage  ;  if  relatively  abundant,  it  takes  a  smaller 
percentage.  And  so  with  respect  to  different  classes  of  the  com- 
munity. If  any  be  in  excess,  it  receives  a  smaller  share  of  the 
annual  product ;  otherwise,  a  larger. 

With  the  increase  of  the  annual  product,  growing  out  of  more 
efficient  labor  and  more  efficient  capital,  the  totality  of  wages 
must  necessarily  advance.  If  it  advance  less  in  any  particular 
class  it  can  only  be  because  that  class  is  relatively  in  excess. 
The  amount  per  head  which  goes  directly  to  labor  of  every  sort 
in  1882  is  more  than  the  whole  product  of  1840,  and  the  amount 


20  "PROGRESS   AND   POVERTY." 

that  goes  directly  and  indirectly  to  labor  of  every  sort  in  1882  is 
double  that  vfhich  went  to  labor  of  every  sort  in  1840. 

Ml'.  George  argues  rightly  that,  at  any  particular  moment, 
industry  is  not  limited  by  capital,  for  there  are  alwaj's  surplus 
stocks  ready  to  support  more  labor,  and  likely  to  be  speedily  made 
good  by  quickened  production ;  but,  indirectly,  and  in  the  long 
run,  industry  is  very  much  affected  by  the  increasing  efficiency 
of  capital,  for  on  this  depends  the  magnitude  of  the  total  annual 
product,  and  on  this  the  rewards  of  industry.  To  secure  this, 
together  with  a  greater  diversity  and  division  of  employments, 
and  to  secure  to  our  own  labor  as  large  a  proportion  of  the  best 
possible  field  of  employment  —  that,  namely,  which  is  found  in 
satisfying  by  our  own  efforts  as  many  of  our  desires  as  possible, 
• —  was  the  avowed  object  of  the 

PROTECTIVE   POLICY 

as  set  forth  by  Alexander  Hamilton ;  and  under  this  policy, 
when  thoroughly  carried  out,  we  have  attained  that  high  rate  of 
wages  which  attracts  two  thirds  of  a  million  of  men  annually  to 
our  shores,  and  which  gives  us  warrant  to  hope  that,  before 
population  can  press  upon  the  means  of  subsistence  in  these 
United  States,  our  people  will  have  become  accustomed  to  so 
high  a  scale  of  living  as  to  ensure  the  exercise  of  that  prudence 
which  will  become  necessary  in  the  altered  conditions  of  the 
nation. 

Mr.  George  can  see  nothing  in  the  policy  but  a  foolish  effort 
to  make  certain  classes  rich ! 

Few  things,  however,  are  so  settled  in  political  economy  as 
that  "  no  industry  can  for  any  length  of  time  obtain  a  higher 
rate  of  profit  than  that  which  is  common  in  the  community." 
If  it  could,  it  would  be  doubly  desirable  to  have  those  industries 
which  might  be  turned  into  monopolies  within  reach,  and  not 
upon  the  other  side  of  the  Atlantic !  Let  it  be  ascertained 
that  a  monopoly  exists  among  us,  —  likely  to  be  permanent,  not 
likely  to  be  speedily  destroyed  by  internal  competition,  —  and 
the  remedy  would  be  the  easiest  conceivable.  A  reduction  of 
the  duty  would  put  the  would-be  monopolists  upon  their  good 
behavior.     But  if,  upon  a  false  or  mistaken  cry  of  monopoly, 


"PROGRESS  AND   POVERTY."  21 

we  destroy  some  of  our  own  industries,  and  transfer  the  scene 
of  monopoly  to  foreign  shores,  we  shall  be  thenceforth  without 
remedy. 

The  outcry  of  monopoly  as  to  industries  easily  inaugurated  by 
moderate  amounts  of  capital  is  generally  passed  over  as  the 
product  of  insincerity;  but  Mr.  George  is  above  suspicion  in 
this  respect.     He  writes  what  he  believes. 

We  come  now  to  what  he  has  to  say  about  the  Malthusian 
Doctrine. 


22  "PEOGRESS  A2;D  POVERTY." 


m. 

Mr.  George  quotes  as  follows  from  Mr.  John  Stuart  Mill :  — 

"  A  greater  number  of  people  cannot,  in  any  given  state  of  civiliza- 
tion, be  collectively  as  well  provided  for  as  a  smaller.  The  niggardli- 
ness of  nature,  not  the  injustice  of  society,  is  the  cause  of  the  penalty 
attached  to  over-population.  An  unjust  distribution  of  wealth  does  not 
aggravate  the  evil,  but,  at  most,  causes  it  to  be  somewhat  earlier  felt. 
It  is  in  vain  to  say  that  all  mouths  which  the  increase  of  mankind  call 
into  existence  bring  with  them  hands.  The  new  mouths  require  as 
much  food  as  the  old  ones,  and  the  hands  do  not  produce  as  much.  If 
all  instruments  of  production  were  held  in  joint  property  by  the  whole 
people,  and  the  produce  divided  with  perfect  equality  among  them, 
and  if  in  a  society  thus  constituted  industry  was  as  energetic  and  the 
produce  as  ample  as  at  the  present  time,  there  would  be  enough  to  make 
all  the  existing  population  extremely  comfortable ;  but  when  that 
population  had  doubled  itself,  as  with  existing  habits  of  the  people  it 
undoubtedly  would  in  little  more  than  twenty  years,  what  would  then 
be  their  condition  1  Unless  the  arts  of  production  were  in  the  same 
time  improved  in  an  almost  unexampled  degree,  the  inferior  soils  which 
must  be  resorted  to,  and  tbe  more  laborious  and  scantUy  remunerative 
cultivation  which  must  be  employed  on  the  superior  soils  to  procure 
food  for  so  much  larger  a  population,  would,  by  an  insuperable  neces- 
sity, render  every  individual  in  the  community  poorer  than  before.  If 
the  population  continued  to  increase  at  the  same  rate,  a  time  would 
soon  arrive  when  no  one  would  have  more  than  mere  necessaries,  and 
soon  after  a  time  when  no  one  would  have  a  sufficiency  of  those,  and 
the  further  increase  of  the  population  would  be  arrested  by  death." 

To  this  Mr.  George  replies :  — 

"  All  this  I  deny.  I  assert  that  the  very  reverse  of  these  propositions 
is  true.     I  assert  that  in   any   given  state  of  civilization   a   greater 


"PROGRESS  AND   POVERTY."  23 

number  of  people  can  collectively  be  better  provided  for  than  a  smaller. 
I  assert  that  the  injustice  of  society,  not  the  niggardliness  of  nature,  is 
the  cause  of  the  want  and  misery  which  the  current  theory  attributes 
to  over-population.  I  assert  that  the  new  mouths  which  an  increasing 
population  call  into  existence  require  no  more  food  than  the  old 
ones,  while  the  hands  they  bring  with  them  can,  in  the  natural 
order  of  things,  produce  more.  I  assert  that,  other  things  being 
equal,  the  greater  the  population  the  greater  the  comfort  which  an 
equitable  distribution  of  wealth  would  give  to  each  individual.  I 
assert  that,  in  a  state  of  equality,  the  natural  increase  of  population 
would  constantly  tend  to  make  each  individual  richer  instead  of 
poorer. 

**  I  thus  distinctly  join  issue  and  submit  the  question  to  the  test  of 
facts." 

Now,  let  us  look  at  his  facts.  They  are  these :  That,  iu  our 
times,  communities  have  increased  faster  in  wealth  than  in. 
population ;  that  it  is  iu  the  densest  populations  we  find  "  costly 
buildings,  fine  furniture,  luxurious  equipages,  statues,  pictures, 
pleasure-gardens,  and  yachts,  men  of  income  and  of  elegant  leisure, 
thieves,  policemen,  menial  servants,  lawyers,  men  of  letters,  and 
the  like;  and  that  capital  overflows  for  remunerative  investment 
from  these  densely  populated  to  sparsely  populated  regions." 
These  things,  he  says,  "conclusively  show  that  vjcalth  is  the 
greatest  where  population  is  densest ;  that  the  production  of 
wealth  to  a  given  amount  of  labor  increases  as  population  in- 
creases." 

But  these  things  do  not  prove  the  contradictory  of  ]Mr.  jSIill's 
propositions,  Mr.  Mill  would  not  deny  that,  in  countries  so  greatly 
undel-peopled  (having  regard  to  the  existing  skill  and  knowledge 
of  mankind  and  the  available  land)  as  were  our  colonies  when, 
as  Adam  Smith  relates,  a  widow  with  half  a  dozen  children  was 
looked  upon  as  an  heiress,  —  he  would  not  deny  that  in  such  cases 
a  mere  increase  of  population  would  bring  increase  of  wealth. 
Mr.  Mill  was  speaking  of  communities  in  which  to  support  a 
widow  who  had  six  children  would  be  a  good  deal  more  dilUcult 
than  to  support  a  widow  without  any  ;  and,  with  respect  to  such, 
he  says  that  a  great  increase  of  population  would  bring  great 
misery,  unless,  at  the  same  time,  the  arts  of  production  M'ere 


24  "PROGKESS  AND   POYEE.TY." 

improved  in  an  almost  unprecedented  degree.  This,  Mr.  George 
thinks,  he  disproves  by  adducing  the  experience  of  the  last  forty- 
years,  in  which  the  arts  of  production  have  been  improved  in  an 
almost  unprecedented  degree. 

Wealth  has  increased  in  consequence  of  these  improvements, 
—  not  in  consequence  of  the  greater  population.  The  greater 
wealth  and  the  greater  population  are  joint  effects  ;  or  rather  the 
improvements  brought  greater  wealth,  and  this  brought  greater 
density  of  population.  This  answers  his  point  as  to  the  general 
advance  in  wealth  and  population  in  our  times.  With  respect 
to  the  comparison  he  draws  between  countries  now  underpeo- 
pled,  —  tliose  in  which  that  density  of  population  which  can  be 
maintained  to  the  best  advantage  with  the  skill  and  the  pro^ 
ductive  instruments  known  in  our  time  has  not  been  reached,  — 
it  is  quite  true  that  greater  wealth  would  ensue  from  greater 
population  up  to  a  certain  not  very  well  defined  point.  More 
capital  can  be  used  to  advantage  as  population  increases ;  the 
steamship  and  the  railroad  become  paying  instruments  where  be- 
fore they  could  not  be  used,  and  capital  speedily  appears,  either 
from  home  savings  or  from  other  communities,  when  the  condi- 
tions exist  for  its  safe  and  paying  investment.  And  with  the 
application  of  more  capital  comes  the  possibility  of  satisfying  new 
desires,  —  the  desires  for  "  costly  buildings,  fine  furniture,  luxuri- 
ous equipages,  statues,  pictures,  pleasure-gardens,  yachts,  elegant 
leisure,  protection  by  means  of  police,  menial  servants,  instruction 
in  the  law,  in  religion,  in  literature,  and  the  like  on  the  part  of 
the  rich,  and  for  better  food,  better  clothing,  better  houses,  better 
schooling,  and  more  amusements  on  the  part  of  the  rest  of  the 
community." 

It  is  the  existence  of  those  desires  and  the  possibility  of  grati- 
fying them  that  leads  to  the  accumulation  of  those  instruments 
of  production  of  which  Mr.  George  himself  says :  — 

"  If  the  farmer  must  use  the  spade  because  he  has  not  capital  enough 
for  a  plough,  the  sickle  instead  of  the  reaping-machine,  the  flail  instead 
of  the  thresher  ;  if  the  machinist  must  rely  upon  the  chisel  for  cutting 
iron,  the  weaver  on  the  hand-loom,  and  so  on,  —  the  productiveness  of 
industry  cannot  be  a  tithe  of  what  it  is  when  aided  by  capital  in  the 
shape  of  the  best  tools  now  in  use." 


"PROGRESS  A2sD  POVERTY."  25 

Well,  then,  these  instrumeuts  of  production,  which  do  nine 
tenths  of  the  work,  can  be  brought  into  existence  and  kept  in 
repair  only  by  abstinence.  Somebody  must  save  what  he  other- 
wise would  have  squandered  in  present  enjoyment.  Instead  of 
orgies  with  boon  companions  he  prefers  to  improve  his  farm, 
to  buy  better  tools,  to  build  a  mill,  etc.  The  instruments  of 
production  into  which  he  transforms  his  savings  are  part  of 
those  which  increase  tenfold  the  gross  products  to  be  divided. 
He  is  clearly  entitled  to  some  portion  of  the  incr,ease  his  savings 
have  effected :  what  that  portion  shall  be  will  be  decided  by  per- 
fectly impartial  umpires,  —  demand  and  supply.  If  of  any  one 
kind  of  the  instruments  of  production  there  are  less  than  the 
community  can  use  to  advantage,  the  rent  for  their  use  will  be 
high,  the  profits  to  be  derived  from  constructing  more  will  be 
great,  and  many  will  be  constructed;  until  at  last  there  will 
come  into  existence  as  many  as  will  command  such  annual  rent 
or  equivalent  profit  as  will  satisfy  the  existing  effective  desire 
for  accumulation.  If  he  cannot  get  income  enough  from  his 
instruments  of  production  to  make  it  worth  while  to  save  in 
this  shape,  he  will  form  instead  instruments  of  convenience :  he 
will  improve  his  dwelling-house  or  build  a  new  one ;  or,  aban- 
doning saving,  he  will  use  better  food,  better  clothing,  go  oftener 
to  the  shows  or  the  play  ;  and  if  he  be  rich,  he  will  call  together 
a  number  of  carpenters,  masons,  and  other  artificers,  and  build 
him  a  "  gilded  palace."  In  building  this  he  will  pass  over  to 
the  artificers  a  portion  of  the  annual  product  which  came  to  him 
as  rent  for  his  part  of  the  community's  property,  and  the  artificers 
will  eat  it  and  drink  it,  and  put  it  into  clotliing,  or  obtain  some 
amusement  with  it,  or  put  a  portion  in  the  bank.  Every  particle 
of  the  value  of  the  gilded  palace  and  its  luxurious  furniture  will, 
when  it  is  finished,  have  passed  into  the  hands  of  labor,  and  the 
greater  part  of  it  will  have  been  consumed  by  those  who  were 
able  and  willing  to  work.  Thereafter  the  gilded  palace  will 
stand  as  a  striking  witness  to  the  fact  that  in  some  previous 
year  or  years  there  were  funds  which  could  be  devoted  to  un- 
productive purposes.  The  totality  of  such  costly  edifices,  yachts, 
etc.,  which  existed  in  San  Francisco  in  1879  were  the  accu- 
mulations since  1849.     They  struck  the  eye  and  excited  the 

4 


26  "PROGRESS   AND   POVERTY." 

imagination,  and  they  led  Mr.  George  to  very  erroneous  con- 
clusions. 

Mr.  George  says  :  — 

"  There  is  no  necessity  for  abstract  reasoning.  The  question  is  one 
of  simple  fact.  Does  the  relative  power  of  producing  wealth  decrease 
with  the  increase  of  population  ]  " 

But  he  wishes  to  establish  the  universal  fact  that  the  produc- 
tion of  wealth  increases  faster  than  population.  This  he  en- 
deavors to  prove  by  inferences  from  other  facts,  —  that  is,  by 
abstract  reasoning.  He  could  not  do  it  in  any  other  way,  except 
by  appealing  to  statistical  facts,  and  is  therefore  not  to  blame 
for  the  method.  What  he  appears  to  err  in  is  the  way  in  which 
he  applied  his  method.  He  looks  at  a  very  sparsely  peopled 
community,  and  sees  that  in  it  a  canoe  is  a  more  suitable  instru- 
ment than  a  steamer,  a  common  road  than  a  railroad ;  that,  in 
short,  there  is  a  limit  to  the  application  of  modern  devices  in 
that  community.  "With  a  greater  population,  more  capital  could 
be  applied ;  and,  to  a  certain  point,  with  increase  in  the  annual 
product  as  compared  with  the  population.  Where  he  errs  is 
in  concluding  that  what  is  true  to  a  certain  point  is  true  indefi- 
nitely. He  is  so  sure  of  this  that  he  instances  California.  He 
says:  "In  1849,  $16  a  day  were  only  ordinary  wages.  Now, 
men  are  glad  to  work  a  week  for  that  sum,  and  money  is  loaned 
by  the  year  for  what  would  not  have  hardly  been  deemed  extor- 
tionate by  the  month."  But,  strange  as  it  may  seem,  Mr.  George 
does  not  think  that  wages  are  lower  because  labor  yields  less 
wealth.     He  says  :  — 

"  On  the  contrary  !  Instead  of  the  wealth-producing  power  of  labor 
being  less  in  California  in  1879  than  in  1849,  I  am  convinced  that  it 
is  greater ;  and  it  seems  to  me  that  no  one  who  considers  how  enor- 
mously during  these  years  the  efficiency  of  labor  in  California  has  been 
increased  by  roads,  wharves,  flumes,  railroads,  steamboats,  telegraphs, 
and  machinery  of  all  kinds,  —  by  a  closer  connection  with  the  rest  of 
the  world,  and  by  the  numberless  economies  resulting  from  a  larger 
population, —  can  doubt  that  the  return  which  labor  receives  from  nature 
in  California  is  on  the  whole  much  greater  now  than  it  was  in  the  days 
of  unexhausted  placers  and  virgin  soil ;   the  increase  in  the  power  of 


"PROGRESS   AND   POVERTY."  27 

the  human  factor  having  more  than  compensated  for  the  decline  in  the 
power  of  the  natural  factor.  That  this  conclusion  is  the  correct  one 
is  proved  hy  many  facts  that  show  that  the  consumption  of  wealth  is 
now  much  greater,  as  compared  with  the  number  of  the  laborers,  than 
it  was  then.  Instead  of  a  population  composed  almost  exclusively  of 
men  in  the  prime  of  life,  a  large  proportion  of  women  and  children  are 
now  supported,  and  other  non-producers  have  increased  in  a  much 
greater  ratio  than  the  population  ;  luxury  has  grown  far  more  than 
wages  have  fallen ;  where  the  best  houses  were  cloth  and  paper 
shanties  are  now  mansions  whose  magnificence  rivals  European 
palaces  ;  there  are  liveried  carriages  on  the  streets  of  Sail  Francisco, 
and  pleasure  yachts  on  her  bay  ;  the  class  who  can  live  sumptuously 
on  their  incomes  has  steadily  grown  ;  there  are  rich  men  beside  whom 
the  richest  of  the  earlier  years  would  seem  little  more  than  paupers,  — 
in  short,  there  are  on  every  hand  the  most  striking  and  conclusive  evi- 
dences that  the  production  and  consumption  of  wealth  have  increased 
with  even  greater  rapidity  than  the  increase  of  population,  and  that  if 
any  class  obtains  less  it  is  solely  because  of  the  greater  inequality  of 
the  distribution." 

This  quotation  is  an  example  of  the  eloquence  with  which  Mr. 
George  states  his  conclusions,  and  of  the  unwariness  with  which 
lie  adopts  them  and  considers  them  proved. 

Wages  had  fallen  to  one  sixth,  and  the  interest  upon  capital 
to  nearly  a  twelfth ;  yet  he  thought  the  annual  product  must 
certainly  be  greater  per  man  than  it  was  in  1849  !  One  would 
think  he  would  have  asked,  If  this  be  so,  what  becomes  of  it  ? 
Eent,  profits,  and  wages  must  take  the  whole ;  and  rent  and 
profit  again  spend  nearly  the  whole  of  their  shares  upon  wages. 
How,  tlien,  could  it  be  that  wages  had  fallen  to  one  sixth  part  of 
what  they  were  ?  Having  come  to  this  question,  it  must  have 
occurred  to  him  to  look  into  the  census  of  1870  and  see  wliat 
were  the  earniugs  of  labor  and  capital,  —  that  is,  the  gross  prod- 
uct out  of  which  the  share  of  rent  must  come.  Looking  into 
this,  he  would  have  found  that  the  value  of  all  farm  products, 
including  betterments  and  additions,  was  $50,000,000,  and  that 
the  number  of  hands  employed  was  forty-eight  thousand,  giv- 
ing $1,040  a  year  to  each ;  or,  dividing  by  three  hundred  days, 
$3.50  a  day.     Turning  now  to  mining,  he  would  have  found  the 


28  "PROGRESS   AND  POVERTY." 

# 

gross  product  $-8,300,000,  and  the  hands  employed  seventy-six 
hundred,  giving  to  each  $1,090  a  year,  or  S3. 60  a  day.  Turning 
again  to  manufactures,  he  would  have  found  the  gross  product 
$68,000,000,  the  materials  being  $27,000,000,  leaving  $31,000,000 
as  the  value  added  to  materials  by  forty-nine  thousand  persons ; 
giving  $633,  or  $2.11  a  day. 

The  agricultural  and  mining  gross  products  included  of  course 
more  rent,  and  the  manufacturing  less  rent ;  but  they  all  three 
contained  funds  which  went  to  non-productive  labor,  —  that  is, 
to  the  seventy-six  thousand  persons  who  were  engaged  in  pro- 
fessional and  personal  services.  The  thirty-three  thousand  per- 
sons engaged  in  trade  and  transportation  could  hardly  have  much 
increased  the  average.  We  will  call  their  earnings  $4  a  day,  or 
$1,200  a  year,  for  each  person,  or  $39,000,000  altogether. 

We  have,  then, 

48,000  persons  engaged  in  agriculture  and  producing     .  $50,000,000 

7,600  in  mining,  producing 8,300,000 

49,000  in  manufacturing 31,000,000 

33,000  in  trade  and  transportation 39,000,000 

76,000  in  professional  and  personal  services     .... 

213,600  $128,300,000 

We  have,  then,  $128,300,000  to  be  divided  among  two  hun- 
dred and  thirteen  thousand  six  hundred  persons,  or  just  about 
$600,  or  $2  a  day  against  $16  a  day,  earned  by  each  man  in 
1849. 

Nobody  supposes  that  the  census  enumerations  are  absolutely 
exact,  but  on  the  other  baud  nobody  believes  that  they  err  by 
fifty  per  cent ;  and  it  will  be  seen  then  how  wild,  beyond  belief, 
were  the  conclusions  which  Mr.  George  considered  proved  by  his 
method  of  reasoning. 

He  believed  that  labor,  assisted  by  capital,  was  earning  in 
California  over  $16  a  day;  and  liis  book  would  tend  to  make 
the  laborer  feel  himself  wronged  if  he  did  not  receive  that  amount. 
But  all  that  labor  and  capital  together  earned  was  about  $2.11 
a  day,  as  shown  by  the  statistics  of  manufactures  ;  and  out  of 
this  and  the  shares  of  rent  in  agriculture  and  mining,  the  per- 
sons engaged  in  professional  and  personal  services  had  to  be 
supported. 


"PROGRESS   AND   POVERTY." 


29 


"With  the  total  annual  product,  such  as  it  was,  the  laborers 
could  not  possibly  have  had  more  than  they  obtained ;  and  it  is 
a  pity  they  and  their  innumerable  well-wishers  in  other  classes 
should  have  been  disquieted  by  Mr.  George's  generous  and  elo- 
quent but  exceedingly  inaccurate  reasoning. 

Analyzing  Massachusetts  in  the  same  way  as  California,  we 
find:  — 


Engaged  in  agriculture  73,000  witli  products  worth   ....    $32,000,000 

Engaged  in  manufactures      279,000    "  "  "  $554,000,000 

Deduct  materials      334,000,000  220,000,000 
Engaged    in    mechanical ") 

and      mining  y    14,000  \      Supposing  these  to 

occupations      )  f  earn  as  much  as  those 

Engaged    in    trade    and  ■)  j  engaged   in  nianufac- 

transporta-  >    83,000  )  turiug 76,000,000 

*^°"  $328,000,000 

Engaged    in    professional  \ 

and     personal  \  131,000 

services  ) 

580,000  persons,   among  whom  §328,000,000   being 
divided  gives  $566  a  year,  or  $1.89  a  day. 

But  the  estimates  in  Massachusetts  were  in  currency,  which 
was  at  15  per  cent  discount,  so  that  the  daily  earnings  in  that 
State  come  down  to  $1.61  against  S2  in  California.  With  all 
her  machinery,  and  all  the  economies  resulting  from  a  denser 
population,  Massachusetts  in  1870  could  not  divide  among  her 
workers  as  much  as  thinly  settled  California. 

And  here  we  come  to  a  distinction  as  to  the  wealth  of  States, 
which  seems  nowhere  present  to  the  mind  of  Mr.  George. 

A  State  may  possess  a  vast  -  accumulation  of  j)ublic  and  pri- 
vate edifices,  and  a  vast  aggregate  of  tools,  machinery,  mills,  etc. 
These  strike  the  eye  and  impress  the  imagination  forcibly.  The 
beholder  infers  at  once  that  he  is  in  an  enormously  rich  com- 
munity, and  his  next  inference  is  that  in  such  a  community  tlie 
wages  of  labor  ought  to  be  very  high.  It  seems  as  if  where  there 
was  so  much  visible  wealth  every  one  ought  to  have  a  great  abun- 
dance. But  the  value  of  these  visible  portions  of  wealth  has 
already  been  consumed  once.  At  the  time  of  their  construction, 
nearly  every  cent  of  their  cost  passed  directly  or  indirectly  into 


30  "PROGRESS   AND   POVERTY." 

the  hands  of  some  kind  of  laborer.  They  have  been  eaten  up 
once  ;  they  cannot  be  eaten  up  again.  All  that  they  can  hereafter 
be  made  to  contribute  is  that  which  their  assistance  adds  to  the 
annual  product.  This  is  every  year  divided  between  rent,  labor, 
and  capital,  in  such  portions  as  demand  and  supply  determine ; 
but  the  part  which  goes  to  rent  and  capital  nearly  all,  as  we 
have  already  seen,  goes  (through  the  hands  of  the  landlords  and 
capitalists)  to  labor. 

"What,  then,  can  be  annually  divided  among  the  members  of 
a  community  is  the  annual  product  of  commodities;  and  that 
nation  is  the  wealthiest  which  can  give  to  each  of  its  members 
the  largest  amount  of  the  "  necessaries,  conveniences,  and  luxu- 
ries of  life."  This  dividend  bears  no  necessary  proportion  to  the 
visible  accumulated  property,  which  is  the  result  of  the  savings 
of  many  years,  and  which  may  have  much,  or  may  have  very 
little,  influence  upon  the  annual  product. 

The  repeated  references  of  Mr.  George  to  the  magnitude  of 
these  accumulations,  as  showing  what  ought  to  be,  or  could  pos- 
sibly be,  the  annual  reward  of  labor,  —  these  are  at  the  bottom 
of  much  that  is  misleading  in  his  book. 

Mr.  John  Stuart  Mill,  as  every  one  knows,  was  a  person  of  the 
highest  integrity,  a  great  logician,  as  much  interested  in  the  fu- 
ture fate  of  the  poorer  classes  as  any  man  who  has  lived  in  our 
times.  His  positions,  as  quoted  in  the  beginning  of  this  chapter, 
seem  not  to  have  been  shaken  by  Mr.  George  in  the  slightest 
degree. 

We  have  now  gone  through  the  first  two  books  of  "  Progress 
and  Poverty,"  and  have  found  what  appear  to  be  good  reasons 
for  dissenting  from  every  one  of  his  distinctive  doctrines. 

It  appears  that  wages  do  not  tend  to  decrease  as  wealth  (in  the 
sense  of  the  gross  annual  product  as  compared  with  population) 
increases,  but  that,  on  the  contrary,  wages  increase  pari  passu 
with  wealth.  It  appears  that  although  productive  labor,  when 
employed,  adds  generally,  by  the  assistance  of  capital,  a  value 
which  is  greater  than  its  wages,  still  this  value  is  not  available 
until  the  product  is  finished  and  put  upon  the  market  and  sold, 
so  as  to  give  a  general  purchasing  power.  It  seems,  therefore, 
that  wages  are  certainly  advanced  by  capital,  without  which  the 


"PROGRESS   AND   rOVERTY."  31 

greater  portion  of  the  work  of  industrial  communities  could  not 
be  carried  on.  It  appears  that  under  favorable  circumstances 
population  does  increase  as  rapidly  as  Malthus  and  Mr.  jVIill 
declared ;  and  although,  with  increasing  skill  and  capital  to  the 
very  extraordinary  extent  that  has  been  seen  in  our  days,  the 
annual  product  in  the  United  States  has  increased  much  more 
rajDidly,  and  so  led  to  an  equal  advance  in  wages,  still  it  is  by  no 
means  certain  that  improvements  can  continue  indefinitely  at 
the  same  rate. 

We  see  that  the  same  causes  have  not  produced  an  equal 
advance  in  wealth  and  wages  in  older  communities,  and  we  see 
that  in  California  there  has  been  a  very  marked  decline.  It 
seems  probable,  then,  that  in  the  course  of  another  century,  or 
half  a  century,  population  with  us  will  press  upon  the  means  of 
subsistence.  It  is  the  hope  of  protectionists  that  the  high  scale 
of  living  which  has  been  established  in  the  meanwhile  will  pre- 
vent the  descent  of  any  large  class  of  the  people  to  transatlantic 
poverty.  Mr.  George  sneers  at  protection  as  being  contrived  and 
intended  to  favor  monopolies ;  but  this  is  as  untrue,  as  offensive, 
and  as  unjust  as  it  would  be  to  stigmatize  him  as  a  selfish  com- 
munist and  demagogue,  whose  only  aim  was  notoriety.  This  is 
not  true ;  neither  is  that. 


32  "PROGEESS  AisD  POVERTY." 


IV. 

How  to  deal  with  the  remaining  chapters. of  "Progress  and 
Poverty  "  without  wearying  the  reader  is  "  the  riddle  which  the 
Sphinx  of  Fate  puts"  to  the  reviewer,  and  which  not  to  answer 
is  —  not  to  be  read !  The  fallacies  are  so  numerous  that  to  reply 
to  each  in  full  would  be  to  exceed  reasonable  limits.  All  that 
can  be  done  is  to  take  the  principal  ones  scriatwi,  and  get  rid  of 
each  as  speedily  as  possible. 

He  says  that  one  thousand  men  working  together  will  do  much 
more  than  one  thousand  times  the  work  of  one  man. 

This  is  true  when  they  have  unlimited  subject-matter  to  work 
upon.  Double  the  population  of  the  United  States,  and  all  might 
be  better  off.  Would  they  be  better  off  if  multiplied  by  a  thou- 
sand ?  Up  to  a  certain  point  the  mutual  helpfulness  of  men 
outweighs  the  relative  but  not  absolute  scarcity  of  materials, 
such  as  land,  mines,  etc. ;  but  only  up  to  a  certain  point.  He 
makes  the  old  error  of  arguing  "  a  dido  secundum  quid  ad  dic- 
tum simpliciter"  This  is  all  that  there  is  in  his  argument,  that 
the  joint  product  of  labor  and  capital  continually  increases  faster 
than  population  increases,  and  that  therefore  the  laborer  must  be 
robbed  if  in  a  densely  peopled  country  he  earns  less  than  the 
wages  usual  where  lands,  mines,  forests,  etc.,  are  more  abundant. 

He  repeats  that  capital  does  not  employ  labor,  but  that  labor 
employs  capital,  and  adduces  in  proof  the  fact  that  capital  was 
originally  formed  by  labor ;  but  when  the  first  capital  was  being 
formed  few  could  exist  upon  a  given  space,  and  society  bore  no 
analogy  to  present  communities  in  which,  according  to  his  own 
dictum,  nine  tenths  of  the  product  is  due  to  the  assistance  of 
capital 


"PKOGKESS  AND   POVERTY."  33 


RENT  AND   CAPITAL. 

He  asserts  that  "  rent  is  the  price  of  monopoly,  arising  from 
the  reduction  to  individual  ownership  of  natural  elements  which 
human  exertion  can  neither  produce  nor  increase."  But  human 
agency  has  already  vastly  increased  their  capacity  and  can  in- 
crease it  still  farther ;  ten  acres  with  sufficient  capital  will  yield 
as  much  as  fifty  without.  Kent,  then,  is  kept  in  check  by  capi- 
tal. Moreover,  he  would  have  us  believe  that  rent  has  actually 
swallowed  up  much  that  belonged  to  labor  in  the  United  States, 
and  that  to  this  cause  we  must  trace  the  panic  of  1873.  Now, 
with  respect  to  Economic  Ground  Rent,  there  seems  reason  to 
doubt  whether  it  has  begun  to  exist  in  the  United  States,  as  far 
as  the  great  mass  of  farms  and  plantations  are  concerned ;  there 
seems,  indeed,  reason  to  believe  that  the  farms  do  not  yield  a 
full  interest  upon  the  mere  improvements  existing  upon  them. 
The  formation  of  this  particular  kind  of  instruments  of  produc- 
tion has  been  over-stimulated  by  our  homestead  laws,  and  by  the 
action  of  that  very  common  desire  of  men  to  acquire  an  absolute 
right  to  a  portion  of  land  and  to  be  each  his  own  master,  with  a 
certainty,  as  nearly  complete  as  possible,  of  never  being  in  want 
of  food  and  seldom  in  want  of  a  moderate  amount  of  conven- 
iences and  luxuries. 

The  competition  of  seven  millions  of  individual  farmers  ought 
surely  to  be  a  sufficient  guarantee  against  monopoly ;  they  M'ill 
not  even  obtain  a  fair  return  for  the  labor  they  have  spent  in 
improvements,  until  increasing  population  and  the  action  of  the 
protective  system  build  up  a  sufficient  market  for  their  products. 
Free  trade,  by  forcing  them  to  offer  a  greatly  increased  quantity 
of  raw  products  to  the  outer  world,  would  infallibly,  under  exist- 
ing conditions,  reduce  very  much  the  exchangeable  value  of  their 
produce,  and  impoverish  them  for  several  generations. 

It  appears  evident,  then,  that  the  panic  of  1873  could  not  have 
been  brought  about  by  a  scarcity  of  raw  products.  Many  mil- 
lions of  farmers  —  each  with  more  land  than  he  liabitually  used, 
each  eager  to  raise  more  when  prices  warranted  —  were  a  suffi- 
cient guarantee  against  any  such  catastrophe. 

5 


34  "PKOGJlESS  AND   POVERTY." 

But  it  may  be  said,  "  There  are  the  rents  of  houses  and  stores 
in  the  cities ;  these  become  exorbitant  and  make  the  production 
of  something  or  other  too  expensive,  and  so  something  or  other 
is  not  made,  and  hence  we  have  a  diminution  in  the  aggregate 
demand." 

But  this  idea  is  contradicted  by  the  facts,  well  known  to  prac- 
tical men,  that  during  a  period  of  excitement  real  estate  is  one  of 
the  last  things  to  rise,  and  that  when  a  period  of  depression  comes 
it  is  one  of  the  last  to  fall.  The  facts  are  empirical,  and  so  may 
be  questioned  until  we  discover  a  reason  for  them.  This  is  not 
far  to  seek.  People  do  not  enlarge  their  quarters  until  they  have 
experienced  high  wages  and  higli  profits  for  some  time,  —  until, 
in  fact,  they  have  got  used  to  them,  and  have  come  to  consider 
them  as  practically  permanent.  The  individual  takes  a  larger 
house  or  more  rooms  because  he  feels  he  can  afford  it,  and  he 
takes  more  space  for  the  accommodation  of  his  business  because 
he  feels  that  an  increasing  business  demands  more,  and  that,  after 
paying  more  rent,  he  will  have  a  larger  sum  left  at  the  end  of 
the  year.  High  rents  in  the  cities  appear  to  be  a  consequence  of 
the  fuller  occupation  of  the  population  ;  and  even  if,  towards  the 
end  of  a  period  of  excitement,  they  become  so  high  as  to  materi- 
ally affect  the  profits  and  consequent  expenditure  of  a  portion  of 
the  dealers,  they  can  only  transfer  to  the  owners  of  houses  and 
lands  the  very  same  sums  that  are  taken  from  the  dealers,  and 
the  recipients  must  in  their  turn  either  spend  them  or  save 
them ;  and  in  saving  they  spend  only  upon  different  people.  It 
is  only  when  it  begins  to  be  seen  that  saving  has  been  overdone, 
—  that  more  instruments  of  production  and  convenience  cannot 
be  formed  with  a  chance  of  their  yielding  the  rate  of  profit  usual 
in  the  community,  —  it  is  only  then  that  the  industrial  move- 
ment begins  to  decrease.  Tlien  laborers  are  thrown  out  of 
employment,  and  with  tliis  comes  a  diminished  demand  for 
commodities  and  a  necessity  for  dismissing  still  more  laborers, 
and  so  on  in  a  widening  circle. 

RENT   NOT   RESPONSIBLE  FOR  PANICS  AND   POVERTY. 

In  a  country  depending  largely  upon  the  export  of  manu- 
factured goods,  like  Great  Britain,  a  panic   may   be   brought 


"PROGRESS   AND   POVERTY."  35 

about  by  a  failure  of  the  crops  of  some  of  her  principal  pur- 
chasers, and  a  consequent  inability  to  buy  ;  but  this  does  not 
arise  from  extravagant  rents  in  either  country. 

Again,  in  a  country  wliich  exports  largely  of  raw  products,  a 
period  of  depression  might  be  brought  about  by  large  crops  and 
low  prices  in  some  other  part  of  the  world ;  but  here  again  rent 
has  nothing  to  do  with  the  matter. 

Mr.  George  appears,  then,  to  have  failed  in  his  attempt  to  fix 
upon  rent  the  responsibility  for  panics.  That  rent  is  not  the 
cause  of  general  poverty  in  the  United  States  is  apparent  enough 
from  the  fact  that  if  from  the  Gross  Annual  Product  of  1880 
jDer  head  we  subtract  the  whole  of  rent  and  the  whole  of  profits, 
there  remains  much  more  than  the  whole  product  per  head 
of  1840.  That  is,  labor  alone  in  1880  took  more  than  labor, 
rent,  and  profits  togetluer  took  in  1840.  And  besides  this,  rent 
and  profits  again  spent  three  quarters  or  more  of  their  share 
upon  labor. 

His  algebraical  formula,  then.  Produce  =  Pent  +  Wages  +  In- 
terest, therefore  Produce  —  Rent  =  Wages  +  Interest,  proves 
nothing.  We  should  rather  say,  Produce  =  Rent  +  Wages  -|-  In- 
terest ;  therefore  Produce  —  (Wages  and  Interest)  =  Rent.  As 
long  as  men  and  capital,  taking  the  whole  country  together,  are 
scarcer  than  land,  they  must  be  paid  first,  and  rent  must  take 
what  they  leave.  When,  in  the  far  future,  men  and  capital  are 
the  more  plenty,  and  land  the  less,  then,  and  then  only,  wiU  his 
interpretation  of  the  formula  be  true.  But  when,  if  ever,  we 
approach  such  a  point,  it  is  fair  to  expect  that  a  population 
long  accustomed  to  convenienees  and  luxuries  will  exercise  suffi- 
cient self-restraint  to  prevent  the  loss  of  them. 

There  are  two  cases  in  which  the  rent  of  land,  and  the  rent  of 
capital  also,  become  oppressive  and  tlie  source  of  poverty.  One 
is  when  the  owners  are  absentees.  This  case  Mr.  George  recog- 
nizes. The  other  is  when  the  owners,  instead  of  buying  their 
conveniences  and  luxuries  of  their  fellow-citizens,  buy  them 
abroad.  Tliis  case  Mr.  George  entirely  ignores.  But  this  is 
semi-absenteeism.  If,  for  instance,  rent  and  profits  together 
receive  in  the  United  States  twenty-four  hundred  millions  out 
of  seven  thousand  millions  annual  product,  in  consideration  of 


36  "TROGRESS   AND   POVERTY." 

the  use  by  the  rest  of  the  community  of  their  land  and  capital, 
and  if  they  proceed  immediately  to  redistribute  tln-ee  fourths  or 
more  of  the  twenty-four  hundred  millions  to  other  classes  of  the 
community,  we  speedily  come  to  have  vast  masses  of  men  who 
are  engaged  in  producing  conveniences  and  luxuries  and  ser- 
vices, and  who  bring  conveniences  and  luxuries  to  the  doors  of 
those  who  produce  necessaries. 

'  But  if  the  owners  of  land  and  of  capital  were  allowed  to  send 
their  twenty-four  hundred  millions  abroad  after  cheap  conven- 
iences and  luxuries,  the  inevitable  effect  would  be  to  break 
down  the  foreign  market  for  our  raw  products,  to  make  what  we 
did  buy  exceedingly  dear  instead  of  cheap,  and,  in  the  end,  to 
limit  us  to  a  small  portion  of  what  we  now  have  by  our  own 
direct  industry.  A  vastly  diminished  gross  annual  product  would 
ensue,  and  rents,  profits,  and  wages  all  suffering  together,  an  im- 
poverished people  would  no  longer  be  able  to  support  the  stately 
universities  that  are  now  in  league  with  the  Cobden  Club  to 
destroy  our  industries. 

It  is  not  charged  that  the  colleges  are  doing  this  intentionally ; 
but  their  good  intentions  cannot  alter  the  result. 

Mr.  George  draws  a  picture  of  the  growth  of  a  village  into  a 
city,  and  tells  us  what  "  some  hard-headed  man  of  business,  who 
has  no  theories,  but  knows  how  to  make  money,"  would  say  if 
he  were  assured  that  the  village  would  in  ten  years  become  a 
city.  He  would  say,  "  Go  and  buy  lands  and  you  will  be  rich." 
But  if  some  one  thinking,  not  knowing,  that  the  village  would 
become  a  great  city,  should  ask  the  advice  of  the  same  hard- 
headed  business  man,  he  would  reply,  — 

"  Speculation  in  land  is  an  exceedingly  unsatisfactory  business  in 
the  aggregate.  If  your  village  become  a  great  city  in  ten  years,  and  if 
your  land  happen  to  be  in  the  right  path  of  it,  you  may  become  rich 
without  any  exertion  on  your  part ;  but  where  one  man  judges  cor- 
rectly, fifty  judge  wrong,  and  find  at  the  end  of  twenty  or  thirty  years 
their  piece  of  land  worth  very  much  less  than  what  the  first  price  of  it 
would  have  grown  to  if  placed  at  interest.  Land  speculation  is  a  great 
lottery,  and  has  an  inordinate  number  of  blanks.  When  a  man  or  a 
family  draws  a  prize,  all  the  world  knows  of  it.  "When  he  draws  a 
blank,  be  keeps  it  to  himself." 


"PROGRESS   AND   POVERTY."  37 

Mr.  George  says  :  — 

"  In  the  city  where  I  write  is  a  man  —  but  the  typo  of  men  every- 
where to  be  found.  —  who  used  to  boil  his  ovvn  beaus  and  fry  his  own 
bacon,  but  who,  now  that  he  has  got  rich,  maintains  a  town  house  that 
takes  up  a  whole  block  and  would  answer  for  a  first-class  hotel,  two 
or  three  country  houses  with  extensive  grounds,  a  large  stud  of  racers, 
a  breeding  farm,  private  track,  etc.,  etc.  It  certainly  takes  at  least  a 
thousand  times,  it  may  be  several  thousand  times,  as  much  land  to 
maintain  this  man  now  as  it  did  when  he  was  poor." 

But  the  question  is  not  how  much  land  he  keeps  vacant.  That 
can  be  of  no  consequence  in  a  State  which  has  but  two  or  three 
persons  to  tlie  square  mile.  Wliat  we  have  occaaion  to  know  is 
what  portion  of  his  income  he  can  or  does  keep  the  rest  of  the 
community  out  of.  His  houses  and  the  improvements  of  his 
pleasure-grounds  have  been  paid  for  years  ago  to  labor.  They 
do  not  form  any  portion  of  his  annual  expenditure.  His  stud  of 
racers  is  the  only  great  expense  which  does  not  almost  entirely 
go  to  labor  at  once ;  and  much  of  this  does.  So  does  the  greater 
part  of  the  additional  expenditure  for  more  delicate  food.  The 
longer  you  look  at  it  the  more  improbable  does  it  api)ear  that  he 
does  or  can  keep  the  rest  of  the  community  out  of  a  tenth  part 
of  his  income,  even  counting  in  all  that  he  pays  for  foreign  com- 
modities. 

But  more  important  than  all  this  is  the  bad  logic  of  calling 
this  man  "a  type  of  men  found  everywhere." 

How  many  out  of  the  seven  millions  of  land-owners  and  as 
many  more  capitalists  in  the  United  States  keep  studs  of  horses  ? 
What  has  such  a  man  as  this  or  a  hundred  such  to  do  with  the 
general  sweep  of  the  nation's  life  ? 

FREE  TRADE  NOT  THE  CAUSE  OF  PROSPERITY. 

Mr.  George  says  that  "free  trade  has  enormously  increased 
the  wealth  of  Great  Britain  ! " 

Other  events,  more  especially  the  discovery  of  Californian  and 
Australian  gold,  occurred  about  the  time  she  entered  upon  the 
career  of  free  trade,  and  those  events  have  caused  a  general  ad- 
vance in  wealth  among  industrial  nations ;  but  as  protectionist 


38  "PROGRESS  AND   POVERTY." 

France  and  the  United  States  have  advanced  much  more  rapidly 
than  Great  Britain,  it  is  not  easy  to  see  what  free  trade  has 
had  to  do  with  it.  It  is  the  policy  of  England  to  exaggerate  her 
prosperity,  and  to  impute  it  all  to  free  trade.  But  if  it  were 
even  so,  the  outside  barbarians  would  inquire  what  free  trade 
had  done  for  India,  Japan,  Turkey,  Ireland,  etc.  If  it  has  ben- 
efited Great  Britain,  if  it  has  not  even  made  the  advance  of  her 
prosperity  less  than  it  would  otherwise  have  been,  the  other 
parties  to  the  exchanges  made  by  Irer  show  no  signs  of  having 
shared  in  the  profits. 

LABOR  PROFITS  BY  IMPROVEMENTS. 

At  page  225  Mr.  George  gives  what  he  considers  a  demon- 
stration that  any  and  all  improvements  enure  to  the  advantage 
of  rent,  and  in  no  way  benefit  the  laborer. 

He  supposes  that  population  remains  the  same,  but  that  im- 
provements in  production  take  place  so  as  to 

"reduce  by  one  tenth  the  expenditure  of  labor  and  capital  neces- 
sary to  produce  the  same  amount  of  wealth.  Now  either  one  tenth  of 
the  labor  and  capital  may  be  freed,  and  production  remain  the  same  as 
before ;  or  the  same  amount  of  labor  and  capital  may  be  employed, 
and  production  be  correspondingly  increased.  But  the  industrial  or- 
ganization, as  in  all  civilized  countries,  is  such  that  labor  and  capital, 
and  especially  labor,  must  press  for  employment  on  any  terms.  The 
industrial  organization  is  such  that  the  mere  laborers  are  not  in  a  posi- 
tion to  demand  their  fair  share  in  the  new  adjustment,  and  that  any 
reduction  in  the  application  of  labor  to  production  will,  at  first  at 
least,  take  the  form,  not  of  giving  each  laborer  the  same  amount  of 
produce  for  less  work,  but  of  throwing  some  of  the  laborers  out  of 
work  and  giving  them  none  of  the  produce.  Now,  owing  to  the  in- 
creased efficiency  of  labor  secured  by  the  new  improvements,  as  great 
a  return  can  be  secured  at  the  point  of  natural  productiveness  repre- 
sented by  eighteen  as  before  at  twenty.  Thus  the  unsatisfied  desire 
for  wealth,  the  competition  of  labor  and  capital  for  employment,  would 
insure  the  extension  of  the  margin  of  production,  we  mil  say  to  eigh- 
teen, and  thus  rent  would  be  increased  by  the  difference  between  eigh- 
teen and  twenty,  while  wages  and  interest  in  quantity  would  be  no 
more  than  before,  and  in  proportion  to  the  whole  produce  would  be 


"PKOGRESS  .VXD   POVERTY."  39 

I'ess.  There  would  be  a  greater  production  of  wealth,  but  the  land- 
owners would  get  the  whole  benefit  (subject  to  temporary  deductions 
which  will  be  hereafter  stated)." 

Possibly  this  might  happen  in  a  country  where,  as  in  Ireland, 
landlords  were  in  the  habit  of  sending  abroad  for  their  con- 
veniences and  luxuries  and  exporting  raw  products  to  pay 
for  them ;  but  in  a  country  like  the  United  States,  where 
the  whole  population  is  accustomed  to  many  conveniences  and 
luxuries,  produced  for  the  most  part  by  our  own  labor  and 
capital,  the  result  would  be  very  different.  The  moment  an}^ 
additional  labor  was  applied  to  the  land  there  would  be  an  over- 
supply  of  raw  products  ;  and  the  exchangeable  value  of  these,  as 
compared  with  highly  finished  commodities  composed  largely  of 
labor  and  capital,  and  as  compared  also  with  services,  would 
decline.  There  would  be  an  increased  demand  for  services  not 
issuing  in  commodities,  and  an  increased  demand  for  conven- 
iences and  luxuries  on  the  part  of  the  whole  community.  Labor 
and  capital  would  be  turned  to  the  production  of  these,  and  the 
end  of  it  all  would  be  a  community  consuming  the  same  abun- 
dance of  necessaries  as  before,  and  a  much  greater  abundance  of 
conveniences  and  luxuries. 

If,  before  the  change,  rent  and  profits  took  one  third  of  the 
product  and  again  distributed  three  quarters  of  that  third  to 
labor  for  services  and  for  commodities,  then  rent  and  profits 
would  not  be  likely  to  retain  any  greater  share  of  the  increased 
product  after  the  change,  for  the  demand  of  rent  and  profits  for 
raw  materials  was  already  satisfied  before. 

It  would  seem  then  that,  so  far  from  the  whole  increase  "oinf 
to  rent,  eleven  twelfths  of  it  would  go  to  labor,  and  part  of  the 
other  twelfth  would  go  to  capital,  and  a  part  of  the  remainder 
would  be  rent  of  improvements  and  not  at  all  ground  rent.  By 
labor  is  here  meant  every  kind  and  description  of  labor,  both 
that  with  the  head  and  that  with  tlic  hands.  Tlie  ainnial  prc»d- 
uct  pays  tliem  all,  and  those  get  the  largest  share  who  are  the 
least  numerous  as  compared  with  the  demand  for  their  work. 

Wherever,  then,  the  productive  efficiency  of  t]i  •  population 
becomes  greater  per  head  it  would  seem  that  w      -i  must  in- 


40  "PROGRESS  AND   POVERTY." 

crease,  whether  the  greater  efficiency  spring  from  augmented 
skill,  or  more  abundant  capital,  or  from  the  mutual  helpfulness 
and  greater  economies  which  attend  a  greater  density  of  popula- 
tion. If  these  advantages  continued  to  increase  indefinitely,  as 
Mr.  George  imagines,  then  wages  would  increase  indefinitely 
but,  unfortunately,  greater  numbers  upon  a  given  space  and 
with  given  skill  and  capital  come  at  last  to  press  upon  the 
aneans  of  subsistence ;  and  then,  however  disagreeable  it  may 
be  to  face  the  fact,  the  only  recourse  by  which  the  population 
can  avoid  increasing  poverty  is  to  avoid  increase  in  numbers. 

All  the  eloquence  in  the  world,  all  the  passionate  declarations 
that  such  an  opinion  impeaches  the  goodness  of  God,  etc.,  will 
not  change  the  disagreeable  fact.  It  is  just  as  well  to  admit 
it  and  act  accordingly ;  and  this  is  exactly  what  every  working- 
man  does  who  considers  before  he  marries  whether  he  can  or 
cannot  support  a  family  and  bring  up  his  children  so  that  they 
will  be  good  and  useful  and  happy  members  of  society. 

Mr.  George  in  effect  tells  this  good  citizen  to  make  no  such 
calculations  ;  that,  in  all  cases,  there  comes  with  each  additional 
pair  of  hands  a  more  than  equal  means  of  production  :  but  Mr. 
George's  conclusions,  though  inspired  by  a  very  good  heart,  are 
arrived  at  by  a  very  bad  logic,  and  he  gives  fatal  advice,  which 
can  only  impoverish  and  destroy  those  whom  he  desires  to  lift  up 
and  enrich.  Ui^  to  a  certain  2ioint  each  additional  pair  of  hands 
increases  the  average  production ;  heyond  a  certain  point  it  is 
diminished.  No  one  who  dispassionately  reflects  upon  this 
matter  for  an  hour  can  be  in  any  doubt  with  regard  to  it. 

The  next  and  last  chapter  will  be  devoted  to  what  Mr.  George 
has  to  say  about  the  wickedness  and  impolicy  of  individual 
property  in  land,  etc. 


"  PROGRESS   A^'D   POVERTY."  4l 


V. 

We  now  come  to  Mr.  George's  views  as  to  justice.    He  says :  — 

"  If  we  are  all  here  by  the  equal  permission  of  the  Creator,  we  are 
all  here  with  an  equal  title  to  the  enjoyment  of  his  bounty,  —  with  an 
equal  right  to  the  use  of  all  that  nature  so  impartially  offers." 

Afterwards  he  says  :  — 

"  Though  the  sovereign  people  of  the  State  of  New  York  consent  to 
the  landed  possessions  of  the  Astors,  the  puniest  infant  that  comes 
wailing  into  the  world,  in  the  squalidest  room  of  the  most  miserable 
tenement-house,  becomes  at  that  moment  seized  of  an  equal  right  with 
the  millionnaires.     And  it  is  robbed  if  the  right  is  denied." 

Many  intelligent  readers,  who  are  not  afflicted  with  a  little 
knowledge  of  formal  logic,  but  who  retain,  unimpaired,  their 
natural  common-sense,  will  see  at  a  glance  that  the  above  pas- 
sacres  contain  a  vast  amount  of  rhetoric.  It  is  assumed  that  the 
value  of  land  of  these  United  States  is  the  product  of  nature ; 
but  nearly  the  whole  of  it  is  the  product  of  capital  slowly  ac- 
quired by  self-denial.  Mr.  George  himself  estimates  that  of  the 
present  annual"  product  nine  tenths  are  due  to  the  efficiency 
which  capital  lends  to  labor.  Take  away  then  the  capital,  — 
take  away  the  farm  improvements,  the  tools,  the  mills,  the 
machinery,  the  forges,  the  houses,  etc.,  and  it  would  seem  that  a 
very  large  portion  of  the  population  must  perish.  They  do  not 
perish,  because  those  who  have  gone  before  have  labored  and 
saved.  But  for  this  antecedent  labor  and  thrift  no  piece  of 
ground  would  command  any  rent.  The  whole  value  then  would 
seem  to  belong  of  right  to  those  who  are  here. 

6      . 


42  "PROGRESS   AND   POVERTY." 

"VVe  welcome  annually  to  our  shores,  it  is  true,  nearly  a  mil- 
lion of  persons,  —  from  every  nation  that  will  assimilate  with 
us  and  adopt  our  habits,  —  feeling  that  there  is  still  room  enough 
for  many  more.  But  what  would  the  people  of  the  United 
States  think  if  each  of  these  immigrants,  not  satistied^with  an 
equal  chance  to  share  in  our  opportunities  to  labor  to  advantage, 
should,  upon  landing,  claim  for  every  man,  woman,  and  child 
a  pro  rata  right  to  the  land  of  the  country  ? 

The  contrast  which  Mr.  George  avails  himself  of,  between  the 
puny  infant  and  a  wealthy  millionnaire,  is  rhetorical  in  the  high- 
est degree.  It  appeals  at  once  to  our  natural  and  laudable  com- 
passion for  the  poor,  and  to  our  natural  but  not  laudable  envy 
of  the  rich.  To  pillage  the  latter  and  pass  the  plunder  over  to 
the  former,  gratifies  at  once  two  strong  passions.  But  how  if,  in 
thus  gratifying  our  blind  inclinations,  we  should  miss  our  aim, 
and  prevent  that  development  of  society  to  which  alone  the 
puny  infant  can  look  for  a  chance  of  unfolding  its  faculties  and 
rising  in  the  world  ?  How  if,  in  robbing  the  rich,  we  rob  a 
thousand  times  as  many  deserving  persons  who  cannot  afford  to 
be  robbed  ? 

RENT  NOT   MONOPOLY. 

Let  us  look  at  some  illustrations  which,  if  a  little  rhetorical 
in  the  opposite  direction,  are  still  many  times  nearer  the  true 
statement  than  is  that  of  Mr.  George. 

Here  is  a  brave-hearted  woman,  sixty  years  old,  left  destitute, 
with  three  children,  long  years  ago.  With  thrift,  intelligence, 
and  self-denial,  she  faced  the  world.  She  saved,  after  many 
years,  a  few  thousand  dollars.  She  bought  a  house  in  a  city, 
paying  half  the  cost,  and  being  able,  upon  its  security,  to  raise  the 
other  half  upon  mortgage.  She  has  denied  herself  fine  clothing, 
amusements,  —  every  kind  of  unthrift.  She  has  brought  up  her 
children  to  be  good  members  of  society.  She  has  barely  enough 
to  support  her  without  charity  until  she  passes  away.  Mr. 
George  proposes  to  take  her  all  in  the  name  of  justice. 

Again:  There  was,  forty  years  ago,  a  young  man,  son  of  a 
New  England  farmer,  who  had  many  children.  The  young  man 
loved  a  young  woman,  and  she  loved  him,  —  loved  him  enough 
to  face  every  hardship,  if  it  were  with  him.     They  two  went 


"PROGRESS  AND   POVERTY."  43 

into  the  wilderness,  knowing  that  a  life  of  privation  was  before 
them,  but  knowing  that  in  course  of  time  the  country  would 
become  settled,  and  that  their  farm  would  in  the  meanwhile  be 
their  bank,  in  which  many  years  of  labor  might,  under  the  laws 
of  their  country,  be  safely  deposited.  They  looked  forward  to 
an  independent  old  age,  and  so-mething  with  which  to  give  their 
children  a  start  in  life.  Even  now,  in  their  declining  years, 
their  farm  has  no  rent  which  can  be  distinguished  from  the  rent 
for  improvements.  Then,  says  Mr.  George,  let  the  rent  of  all  be 
taken.     And  this  in  the  name  of  justice  ! 

To  the  mind  of  Mr.  George,  rent  is  monopoly.  He  imagines 
one  man  owning  all  the  land,  and  infers  that  under  such  circum- 
stances the  whole  population  would  be  his  slaves.  But  what 
light  does  such  an  imagining  throw  upon  the  case  of  the  United 
States,  where  there  are  certainly  many  millions  of  land-own- 
ers ?  The  land-owners  of  the  country  cannot  possibly  com- 
bine to  make  food  scarce,  nor  can  the  land-owners  of  the  city 
combine  to  make  commodities  dear.  There  are  plenty  of  other 
sites  for- cities,  and  there  are  plenty  of  competing  cities  already. 
The  rents  which  are  paid  are  paid  simply  because  the  sites  are 
worth  more  than  is  paid  for  them.  They  would  not  be  any 
lower  if  they  were  paid  to  the  government  instead  of  to  indi- 
viduals ;  and  if  city  governments  are  tlie  sinks  of  corruption  Mr. 
George  believes  them  to  be,  the  transfer  of  the  funds  into  their 
hands  would  not  seem  to  be  in  the  interest  of  civilization.  It 
would  be  infinitely  better  to  leave  them  in  the  hands  of  the 
present  owners,  to  be  by  them  distributed  —  as  tliey  must 
be  —  for  services  and  for  commodities,  and  for  the  formation 
of  new  capital,  by  whicli  the  annual  product  may  l)e  still  further 
augmented. 

Mr.  George  instances  several  cases  in  which  land-owners  in 
Great  Britain  have  manifestly  abused  their  power  and  pushed 
tlie  rights  of  property  beyond  their  just  limits.  Such  instances 
are  proper  for  legal  restraint.  It  is  not  necessary  to  confiscate 
all  property  in  land  in  order  to  prevent  some  abuses.  To  turn 
Mr.  George's  favorite  illustration  upon  him :  it  is  not  necessary 
to  burn  down  your  house  because  there  is  a  pig  in  it.  The  pig  ' 
can  be  driven  out. 


44  "PEOGEESS  AND   POVERTY. 


RENTS  IN   A  GROWING  COUNTRY. 


Our  author  appears  to  have  knowledge  of  only  one  kind  of 
rent  —  that  of  Eicardo  -■ —  which  arises  from  a  pi-essure  of  popu- 
lation upon  subsistence  forcing  inferior  lands  to  be  taken  into , 
cultivation,  and  is  thus  an  evidence  of  diminishing  comfort. 
But  there  does  not  seem  to  be  any  rent  of  this  description  in  the 
United  States.  The  rent  of  farming  lands  generally  is  as  yet 
the  rent  of  improvements,  and  the  rent  in  cities  and  the  vicinity 
of  cities  is  spontaneous  ascending  rent  arising  out  of  an  improve- 
ment, not  out  of  a  diminution,  of  the  productiveness  of  labor. 
Capitalists  set  themselves  down  beside  one  another  and  carry  on 
certain  industries  at  so  great  an  advantage  that  more  capital  can 
be  applied  to  the  adjacent  farms,  and  their  product  be  greatly 
increased.  The  distant  farms  produce  just  as  much  as  before. 
As  the  city  grows,  rents  in  some  portions  increase ;  and  some 
capitalists,  enticed  by  this  chance,  build  stores  and  houses  rather 
than  engage  in  manufacturing.  For  the  opportunity  to  do  this 
they  are  willing  to  pay  high  prices  for  land,  and  the  capital  they 
would  otherwise  employ  themselves  is  employed  by  others,  from 
whom  they  buy  land. 

Some  persons  or  families  who  have  made  fortunate  or  saga- 
cious investments  of  this  sort  have  benefited  largely ;  they  have 
drawn  the  prizes  in  the  Land  Lottery.  But  others,  many  others, 
draw  blanks.  I  have  in  mind  not  a  few.  One  where  $50,000 
were  loaned  upon  property,  the  property  foreclosed,  and,  after 
twenty  years,  sold  for  one  third  of  the  sum  advanced,  not  a  cent 
of  interest  having  been  ever  received.  Another,  a  case  of  prop- 
erty held  twenty  years  and  not  yet  salable  at  first  cost,  having 
never  yielded  any  income,  and  being  taxed  all  the  time  at  its 
full  value.  These  cases  w^ere  in  a  city.  The  city  in  the  latter 
case  grew  the  wrong  way  !  That  it  is  best  for  society  that  prop- 
erty in  land  should  be  under  individual  management  is  so  mani- 
fest that  even  Mr.  George  admits  it;  but  he  proposes  to  take 
the  income  of  it  for  the  State,  because  every  infant  born  in  the 
world  has  an  equal  right  to  his  individual  proportion  of  the 
planet ! 

To  the  writer  the  proposal  appears  to  be  unwise,  useless,  un- 


"progress  and  poverty."  45 

just,  and  wicked.  That  abuses  of  the  rights  of  property  ought 
to  be  restrained,  and  that  a  limit  might  be,  and  perhaps  ought  to 
be,  fixed  to  the  quantity  of  land  that  any  one  man  or  family 
may  engross,  may  be  admitted ;  but  the  suggestion  that  society 
may  repudiate  its  own  titles,  without  compensation,  under  the  sub- 
terfuge that  the  present  generation  cannot  be  bound  by  the  past, 
is  one  which  so  evidently  upright  a  person  as  our  author  could 
never  have  made  if  he  had  not  been  carried  out  of  himself  by  the 
imagination  that  he  had  discovered  the  source  of  all  social  evil. 

Would  that  he  had !  With  fifty  years  of  moderate  economy 
we  could  buy  back  our  concessions,  and,  thereafter,  there  would 
be  no  more  poverty  or  wickedness  upon  earth  !  But,  alas  !  his 
supposed  cause  (the  rise  of  real  estate  before  a  panic)  is  not  a 
cause,  but  a  concurrent  effect  of  quite  another  cause. 

THE   LAWS   OF  WAGES. 

But  if  our  examination  of  "  Progress  and  Poverty  "  shows  that 
we  must  abandon  the  belief  in  the  discoveiy  by  our  author  of  a 
panacea  for  all  social  evils,  it  shows,  on  the  otlier  hand,  that  we 
may  dismiss  his  fears  of  wages  tending  to  a  minimum,  and  of 
rent  devouring  the  whole  annual  product. 

So  long  as  this  annual  product  increases,  wages  also  must  in- 
crease ;  and  there  appears  to  be  no  reason  to  apprehend  that  they 
will  not  increase  for  a  long  period  imless  the  people,  misled  by 
fallacious  advice,  should  abandon  the  protective  policy  and  permit 
the  recipients  of  rent  and  of  profits,  and  the  non-productive 
classes,  who  are  supported  out  of  rent  and  profits,  to  send  abroad 
for  the  greater  part  of  their  commodities.  So  long  as  the  men 
who  get  their  ten  or  twenty  or  thirty  or  more  dollars  a  day  from 
fees,  salaries,  or  profits,  are  content  to  buy  their  commodities 
from  the  men  who  get  their  dollar  and  a  half,  or  two  dollars,  or 
three  dollars  a  day,  so  long  (until,  at  all  events,  population 
presses  on  the  means  of  subsistence)  will  the  annual  product, 
and  the  consequent  remuneration  to  every  land  of  labor,  con- 
tinue to  augment.  The  progress  wiU  not  be  continuous,  but  in 
waves ;  and  during  the  retrocessions  tliere  will  be  severe  dis- 
tress among  all  classes  who  have  not  laid  by  something  for  the 
"  rainy  day." 


46  -  "PROGRESS   AND   POVERTY." 

How  these  periods  of  depression  may  be  shortened  and  made 
less  frequent  is  worthy  of  the  profound  study  of  the  intelligent 
and  philanthropic ;  and,  meanwhile,  it  is  some  consolation  to  see 
clearly  that  such  periods  are  by  no  means  mere  aggravations  of 
a  general  course  of  economic  deterioration,  as  Mr.  George  sup- 
poses, but  that  they  are,  on  the  contrary,  only  temporary  pauses 
in  a  general  course  of  economic  improvement. 

And  now,  having  performed  the  disagreeable  task  of  picking 
flaws  in  "  Progress  and  Poverty,"  let  us  gratefully  admit,  once 
more,  that  it  is  a  brilliant  book,  glowing  with  a  noble  philan- 
thropy, courage,  and  self-devotion.  All  that  we  have  read  in 
fable,  or  history,  or  the  records  of  science,  is  brought  again  to 
mind  in  admirable  sentences,  and  there  is  much  of  most  inter- 
esting and  suggestive  thought  and  speculation.  If  political 
economy  could  all  be  strained  out,  there  would  remain  a  vol- 
ume which  every  critic  would  applaud,  and  which  the  general 
reader  would  turn  to  again  and  again  as  a  source  of  improve- 
ment and  pleasure.  As  it  is,  the  book  is  well  suited  to  fas- 
cinate and  mislead  the  inexperienced,  the  impatient,  the  many 
who  judge  by  the  heart  rather  than  by  the  head,  and  all  those 
who,  in  seeking  an  imaginary  right,  are  willing  to  commit  a 
certain  and  irretrievable  wroncr. 


University  Press :  John  Wilson  &  Soitj  Cambridge. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

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